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Modeling which factors impact interest rates

Wang, Guizhou; Hausken, Kjell - In: Journal of Central Banking Theory and Practice 12 (2023) 2, pp. 211-237

The Taylor (1993) rule for determining interest rates is generalized to account for three additional variables: The … various combinations of the Taylor rule, the Quantity Equation (Friedman, 1970), and the Phillips (1958) curve. The monthly US … least squares method gives better results than the Taylor rule. The optimal parameter values involve a relatively high …

Persistent link: https://www.econbiz.de/10014558406

Changes in the Balance of Power Between the Wage and Price Setters and the Central Bank: Consequences for the Phillips Curve and the NAIRU

Kromphardt, Jürgen; Logeay, Camille - 2007

In this paper we introduce and test the hypothesis that the relation between inflation and unemployment has been in many countries subject to a significant change in the early 1990's after the disinflation period. That period began between 1975 and 1980 after the first (or the second) oil price...

Persistent link: https://www.econbiz.de/10010260589

Productivity and the Natural Rate of Unemployment

Slacalek, Jiri - 2004

I propose an econometric model that improves upon existing methods of estimating the natural rate of unemployment (NAIRU) by using information contained in the trend of productivity growth. My approach enhances the recently proposed model of Staiger, Stock and Watson (1997) in several respects....

Persistent link: https://www.econbiz.de/10010260826

Hyperbolic discounting and the Phillips curve

Graham, Liam; Snower, Dennis J. - 2007

Using a standard dynamic general equilibrium model, we show that the interaction of staggered nominal contracts with hyperbolic discounting leads to inflation having significant long-run effects on real variables.

Persistent link: https://www.econbiz.de/10010272966

Increasing returns to scale and the long-run Phillips curve

Vaona, Andrea; Snower, Dennis J. - 2006

A growing body of empirical evidence shows that there exists a long-run positive tradeoff between inflation and real macroeconomic activity. Within a New Keynesian framewok, we examine how increasing returns generate a positive long-run relation between inflation and output.

Persistent link: https://www.econbiz.de/10010273150

The efficiency wages Phillips curve: Closed economy versus open economy

Vaona, Andrea - 2011

The paper extends the efficiency wages Phillips curve from a closed economy context to an open economy one with both commodity trade and capital mobility. Opening the trade account does not alter the slope of the Phillips curve, but it makes its position a function of the change of foreign and...

Persistent link: https://www.econbiz.de/10010277343

Money illusion and the long-run Phillips curve in staggered wage setting models

Vaona, Andrea - 2011

We consider the effect of money illusion - defined referring to Stevens' ratio estimation function - on the long-run Phillips curve in an otherwise standard New Keynesian model of sticky wages. We show that if households under-perceive real economic variables, negative money...

Persistent link: https://www.econbiz.de/10010277352

Increasing returns to scale and the long-run Phillips curve

Vaona, Andrea; Snower, Dennis J. - 2007

Persistent link: https://www.econbiz.de/10010325611

The price-price Phillips curve in small open economies and monetary unions: Theory and empirics

Vaona, Andrea - 2014

This paper extends the efficiency wages/partially adaptive expectations Phillips curve, otherwise known as the price-price Phillips curve, from a closed economy context to an open economy one with both commodity trade and capital mobility. We also consider the case of a monetary union (a...

Persistent link: https://www.econbiz.de/10010332011

Fairness and the disinflation puzzle

Lunardelli, Andre - 2014

Following Driscoll and Holden (2004), I model forward-looking workers who consider it unfair if a wage adjustment fails to match past inflation. However, the present paper proposes a much larger effect by using the job finding rate as the measure of workers' opportunities outside the firm rather...

Persistent link: https://www.econbiz.de/10010377474