Econometric Evaluation of the New Keynesian Phillips Curve

Download or read book Econometric Evaluation of the New Keynesian Phillips Curve written by Gunnar Bardsen and published by . This book was released on 2004 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We give an appraisal of the New Keynesian Phillips curve (NPCM) as an empirical model of European inflation. The favourable evidence for NPCMs on euro-area data reported in earlier studies is shown to depend on specific choices made about estimation methodology. The NPCM can be re-interpreted as a highly restricted equilibrium correction model. We also report the outcome of tests based on variable addition and encompassing of existing models. The results show that economists should not accept the NPCM too readily.