This paper examines theoretically and empirically the controversial notion of equilibrium rate of unemployment (ERU) which opposes proponents of the Phillips curve to those of the WS/PS models. Theoretically, this paper shows that the specification of the wage equation has a significant...

Standard open economy models predict that openness to trade should exert a positive effect on the slope of the output-inflation tradeoff, or Phillips curve, but such a proposition finds very little support in the existing empirical literature. We propose a new test of this hypothesis based on...

A number of thoretical models predict that the slope of the Phillips curve increases with trade openness, but cross-country studies provide little evidence for such a correlation. We highlight two reasons for this finding. Firstly, the strength of the relationship may depend on the extent of...

The paper examines the impact of trade integration and product market competition on firms' price setting behaviour and the degree of price stickiness. The analysis is based on a New-Keynesian open-economy DSGE model with variable desired mark-ups and Calvo price setting in which the frequency...

A number of theoretical models predict that the slope of the Phillips curve increases with trade openness, but cross-country studies provide little evidence for such a correlation. We highlight two reasons for this finding. Firstly, the strength of the relationship may depend on the extent of...

Standard open economy models predict that openness to trade should exert a positive effect on the slope of the output-inflation tradeoff, or Phillips curve, but such a proposition finds very little support in the existing empirical literature. We propose a new test of this hypothesis based on...