Revisiting the Phillips Curve and the Lucas Critique
Many OECD countries are facing problems of high government debt and high unemployment. Consequently, a monetary stimulus is being increasingly viewed as a solution to curb the rising debt burden and stimulate economic growth. Some OECD countries are setting inflation target at 2% or even higher. In...
Main Author: | |
---|---|
Format: | Article in Journal/Newspaper |
Language: | unknown |
Subjects: | |
Online Access: | https://ojs.amhinternational.com/index.php/jebs/article/view/397/397 https://ojs.amhinternational.com/index.php/jebs/article/view/397 |
id |
ftrepec:oai:RePEc:rnd:arjebs:v:5:y:2013:i:4:p:221-225 |
---|---|
record_format |
openpolar |
spelling |
ftrepec:oai:RePEc:rnd:arjebs:v:5:y:2013:i:4:p:221-225 2023-05-15T16:49:22+02:00 Revisiting the Phillips Curve and the Lucas Critique Md. Sharif Hossain https://ojs.amhinternational.com/index.php/jebs/article/view/397/397 https://ojs.amhinternational.com/index.php/jebs/article/view/397 unknown https://ojs.amhinternational.com/index.php/jebs/article/view/397/397 https://ojs.amhinternational.com/index.php/jebs/article/view/397 article ftrepec 2020-12-04T13:39:06Z Many OECD countries are facing problems of high government debt and high unemployment. Consequently, a monetary stimulus is being increasingly viewed as a solution to curb the rising debt burden and stimulate economic growth. Some OECD countries are setting inflation target at 2% or even higher. In this paper we investigate the likely impact of inflation on unemployment for a panel of 10 highincome OECD countries, namely, Australia, Denmark, Iceland, Japan, Korea, New Zealand, Norway, Sweden, Switzerland and the United States. The period of study is 1970-2012. Results indicate a significantly positive long-run impact of inflation on unemployment. Granger causality indicates long-run bi-directional causality between inflation and unemployment. For the 10 OECD countries and the period of this study, the empirical findings support the Lucas critique: inflation and unemployment are positively correlated. A monetary stimulus, therefore, will most likely aggravate the unemployment scenario in the 10 OCED countries under study. Article in Journal/Newspaper Iceland RePEc (Research Papers in Economics) New Zealand Norway |
institution |
Open Polar |
collection |
RePEc (Research Papers in Economics) |
op_collection_id |
ftrepec |
language |
unknown |
description |
Many OECD countries are facing problems of high government debt and high unemployment. Consequently, a monetary stimulus is being increasingly viewed as a solution to curb the rising debt burden and stimulate economic growth. Some OECD countries are setting inflation target at 2% or even higher. In this paper we investigate the likely impact of inflation on unemployment for a panel of 10 highincome OECD countries, namely, Australia, Denmark, Iceland, Japan, Korea, New Zealand, Norway, Sweden, Switzerland and the United States. The period of study is 1970-2012. Results indicate a significantly positive long-run impact of inflation on unemployment. Granger causality indicates long-run bi-directional causality between inflation and unemployment. For the 10 OECD countries and the period of this study, the empirical findings support the Lucas critique: inflation and unemployment are positively correlated. A monetary stimulus, therefore, will most likely aggravate the unemployment scenario in the 10 OCED countries under study. |
format |
Article in Journal/Newspaper |
author |
Md. Sharif Hossain |
spellingShingle |
Md. Sharif Hossain Revisiting the Phillips Curve and the Lucas Critique |
author_facet |
Md. Sharif Hossain |
author_sort |
Md. Sharif Hossain |
title |
Revisiting the Phillips Curve and the Lucas Critique |
title_short |
Revisiting the Phillips Curve and the Lucas Critique |
title_full |
Revisiting the Phillips Curve and the Lucas Critique |
title_fullStr |
Revisiting the Phillips Curve and the Lucas Critique |
title_full_unstemmed |
Revisiting the Phillips Curve and the Lucas Critique |
title_sort |
revisiting the phillips curve and the lucas critique |
url |
https://ojs.amhinternational.com/index.php/jebs/article/view/397/397 https://ojs.amhinternational.com/index.php/jebs/article/view/397 |
geographic |
New Zealand Norway |
geographic_facet |
New Zealand Norway |
genre |
Iceland |
genre_facet |
Iceland |
op_relation |
https://ojs.amhinternational.com/index.php/jebs/article/view/397/397 https://ojs.amhinternational.com/index.php/jebs/article/view/397 |
_version_ |
1766039520443105280 |