Kim, Chang-Jin; Manopimoke, Pym; Nelson, Charles R. - Institute of Economic Research, Korea University - 2013
In this paper, we investigate the nature of structural breaks in inflation by estimating a version of the New Keynesian Phillips curve (NKPC) in the presence of a unit root in inflation. We show that, with a unit root in inflation, the NKPC implies an unobserved components model that consists of...
