Hassler, Uwe ; Neugart, Michael (2002)
Inflation-Unemployment Tradeoff and Regional Labor Market Data.
Report, Bibliographie
Abstract
We estimate a linear and a piecewise linear Phillips curve model with regional labor market data for West German and Neue Länder. Employing regional observations allows us to country difference the data. This eliminates, under the assumption of homogeneous Länder, supply shocks and changes in the formation of expectations as possible identification failures. With seemingly unrelated regressions we find a flat Phillips curve in the Neue Länder. For the West German Länder a piecewise linear model with a higher inflation-unemployment tradeoff for the regime of low unemployment rates fits the data very well. The results hold true if we control for endogeneity of the unemployment rate. With a kinked but upward sloping aggregate supply curve there seems to be room for stabilization policies, at least in the range of aggregate demand shifts that our data covers.
| Item Type: | Report |
|---|---|
| Erschienen: | 2002 |
| Creators: | Hassler, Uwe ; Neugart, Michael |
| Type of entry: | Bibliographie |
| Title: | Inflation-Unemployment Tradeoff and Regional Labor Market Data |
| Language: | English |
| Date: | September 2002 |
| Place of Publication: | Darmstadt |
| Series: | Darmstadt Discussion Papers in Economics |
| Series Volume: | 112 |
| URL / URN: | http://econstor.eu/bitstream/10419/84856/1/ddpie_112.pdf |
| Abstract: | We estimate a linear and a piecewise linear Phillips curve model with regional labor market data for West German and Neue Länder. Employing regional observations allows us to country difference the data. This eliminates, under the assumption of homogeneous Länder, supply shocks and changes in the formation of expectations as possible identification failures. With seemingly unrelated regressions we find a flat Phillips curve in the Neue Länder. For the West German Länder a piecewise linear model with a higher inflation-unemployment tradeoff for the regime of low unemployment rates fits the data very well. The results hold true if we control for endogeneity of the unemployment rate. With a kinked but upward sloping aggregate supply curve there seems to be room for stabilization policies, at least in the range of aggregate demand shifts that our data covers. |
| Uncontrolled Keywords: | inflation-unemployment tradeoff, NAIRU, regional labor market data, seemingly unrelated regression |
| Additional Information: | JEL-classification: E24, E31 |
| Divisions: | 01 Department of Law and Economics 01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete |
| Date Deposited: | 07 Nov 2009 08:55 |
| Last Modified: | 11 Oct 2021 09:45 |
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