Short-run and long-run interaction between inflation and unemployment in the USA
The aim of this study is to investigate both the short-run and long-run relationship between inflation and unemployment characterizing the US economy in the last 30 years. To this end a cointegrated structural VAR vs built. Since unemployment does not cause inflation at frequency zero a recursive structure, with inflation ordered first, allows the identification of a permanent and a transitory shock (cf. Ribba, Economics Letters 56, pp. 253-6, 1997). The main conclusions of the investigation are that: (i) in the short run, the existence of a tradeoff induced by the transitory shock is confirmed; (ii) in the long run, the two variables move one-for-one in the same direction driven by a permanent supply shock.
Year of publication: |
2003
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Authors: | Ribba, Antonio |
Published in: |
Applied Economics Letters. - Taylor & Francis Journals, ISSN 1350-4851. - Vol. 10.2003, 6, p. 373-376
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Publisher: |
Taylor & Francis Journals |
Saved in:
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