Article1995

New Keynesian Economics and the Phillips Curve

896 citations0/0 files storedJournal of money credit and banking

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Monetary Policy and Economic Impact Economic Theory and Policy Economic theories and models

Abstract

Models with sticky prices are an important part of New Keynesian economics. The author shows that several of the New Keynesian models imply a formulation that is similar to the expectations-augmented Phillips curve of Milton Friedman and Edmund Phelps. He then presents new estimates of the New Keynesian Phillips curve. The author uses two proxies for price expectations: survey-based measures and an econometric-based measure originally developed by Bennett McCallum (1976). Overall, the results are consistent with the model but the survey-based results are more precise, suggesting that the surveys may be better measures of actual expectations. Copyright 1995 by Ohio State University Press.

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References

1989The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis 1973Some International Evidence on Output-Inflation Tradeoffs.1982Sticky Prices in the United States 1986The Rigidity of Prices 1995Sticky Prices: New Evidence from Retail Catalogs

Cited by

2004Oil and the Macroeconomy Since the 1970s 1999Optimal Monetary Policy Inertia 2002Prices and unit labor costs: a new test of price stickiness 2002Term structure evidence on interest rate smoothing and monetary policy inertia 2001Optimal monetary policy responses to relative-price changes 2001The Inexorable and Mysterious Tradeoff Between Inflation and Unemployment 1999Nominal income targeting in an open-economy optimizing model 1997Is inflation sticky?

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