Testing the significance and the non-linearity of the Phillips trade-off in the Euro Area

• Type: Article in International Scientific Journal
• Date: 2005

Authors

Álvaro Aguiar (Author) FEP; Manuel Mota Freitas Martins (Author) FEP

Journal

Title: Empirical Economics

Vol. 30 No. 3

Pages: 665-691

ISSN: 0377-7332

Publisher: Springer Nature

Indexing

ISI Web of Knowledge - 16 Citations

ISI Web of Science

Scopus - 14 Citations

Econlit

Scientific classification

FOS: Social sciences > Economics and Business

CORDIS: Social sciences > Economics

Other information

Authenticus ID: P-000-11Q

DOI: 10.1007/s00181-005-0250-z

Abstract (EN): This paper tests the significance and the non-linearity of the Phillips trade-off in the aggregate Euro Area, in an unobserved components model of stochastic NAIRU and trend output featuring the Phillips equation and the Okun law as main identifying equations, with quarterly data for 1970:12002:III. The Phillips curve turns out to be linear and its trade-off statistically significant, while non-linearity shows up in the Okun relation. The results prove to be robust to alternative lag length structures of the model, and to alternative non-linear functional forms. The trend-cycle decompositions estimated with the model capture the main features of the Euro Area's recent macroeconomic record.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 27