United States Phillips curves are routinely estimated without accounting for the shifts in mean inflation. As a result … the case. We also demonstrate that once the shifts in mean inflation are accounted for the ARCH is largely eliminated in … the estimated model and the model defining expected rate of inflation in the New Keynesian model plays no significant role …

data. In particular, the consequences of inflation having discrete breaks in mean have not been studied adequately. We show … mean inflation and obtain meaningful and unbiased estimates of the short- and long-run Phillips curves in the United States. …

‘Modern’ Phillips curve theories predict inflation is an integrated, or near integrated, process. However, inflation … shifting mean. If agents believe inflation is integrated as in the ‘modern’ theories then they are making systematic errors … concerning the statistical process of inflation. An alternative theory of the Phillips curve is developed that is consistent with …

‘Modern’ Phillips curve theories predict inflation is an integrated, or near integrated, process. However, inflation … shifting mean. If agents believe inflation is integrated as in the ‘modern’ theories then they are making systematic errors … concerning the statistical process of inflation. An alternative theory of the Phillips curve is developed that is consistent with …