Publication
Jun 2007
This paper analyzes how inflation and unemployment are related in both the short run and the long run. The author tests various price equations using quarterly US data from 1952 to the present. The aim is to see which price equation best explains the historical data. The results reject the use of rational expectations and suggest that the best specification is a price equation in level terms embedded in a price-wage model, where the wage equation is also in level terms.
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English (PDF, 31 pages, 277 KB) |
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Author | Ray C Fair |
Series | Kiel Institute Working Papers |
Issue | 1342 |
Publisher | Kiel Institute for the World Economy |
Copyright | © 2007 Kiel Institute for the World Economy |