The hypothesis of Phillips curve trade-off is tested by applying a two-state first-order Markov switching model to estimate a simple expectation-augmented Phillips curve, which allows for the possibility that samples are drawn from two normal distributions. Evidence from the UK shows that, two...

International capital mobility in Taiwan is tested by estimating the regime-switching investment-saving correlation. A Markov-switching model is applied which allows the samples to be drawn from two different regimes; high mobility and low mobility. Empirical results are investigated and...