Philips-Curve

Remastered
Lucas van der Kleij (11004517)

University of Amsterdam
2017
Contents
1 Introduction 2

2 Theory 2

3 Data & Model 2

4 Results 2

5 Conclusion 2
1 Introduction
orldwide, the Philips-curve has been
W a solid foundation for explaining the
relation between inflation rates and unem-
ployment rates. Originally, the Philips-curve
aimed to find a relation between money wage
changes and unemployment. Recent litera-
ture however, assumes (i) inflation instead
of money wage and (ii) ignore non-linearity.
Besides these assumptions, most economics
no longer use the original model due to
its simplicity and lack of explaining power
(Hoover 2008). Instead, many use modified
version to account for this lack by includ-
ing other indicators; for example, Non Ac-
celerating Inflation Rate of Unemployment
(NAIRU), oil prices, inflation forecasts and
Gross Domestic Product (GDP).
In this research I aim to find an expla-
nation for the inflation rate by introducing
several indicators which have been proven to
have a significant effect on inflation rates. We
evaluate the equation introduced by .. and
test whether it can be simplified.
2
2 Theory
3 Data & Model
4 Results
5 Conclusion
Does money indicators help forecast infla-
tion? (Horyath 2011)
Does the level of the yield curve predict in-
flation? (Kaya 2014)
Are Qualitative Inflation Expectations Useful
to Predict Inflation? (2011)
Evaluating core inflation indicators (Marques
2003)
Forecasting US consumer price index: does
nonlinearity matter? (Alvarez 2016)
The impact of oil price changes on Span-
ish and euro area consumer price inflation
(Alvarez 2011)
An open-economy new Keynesian Phillips
curve for the U.K.
References
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