Estimation of New- Keynesian Phillips Curve with Co-integration and VAR Methods: The Case of Iran
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Timor Rahmani * , Hossein Amiri |
, trahmani@ut.ac.ir |
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Abstract: (16085 Views) |
In this article, using New- Keynesian approach for inflation and unemployment which focuses on the menu costs and rigidity of prices and wages, first a bi-variate system including inflation and unemployment and a tri-variate system with inflation, unemployment and mark-up of the costs of labor force have been estimated. Then the long-term relationship between these variables has been estimated by using co-integration and VAR models. The estimation of these two systems gives a positive and long-term relationship between inflation and unemployment. Also the relationship between inflation and mark-up of the cost of labor force has been estimated which is negative and therefore, there is a positive relation between inflation and unemployment. Such Positive relationship indicates chronic stagnation phenomena in the Iranian Economy. |
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Keywords: New-Keynesian Phillips Curve, Inflation Rate, Unemployment Rate, Menu Costs, Rigidity of Prices and Wages, Co-Integration and VAR Models |
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Full-Text [PDF 379 kb]
(3107 Downloads)
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Type of Study: Research |
Subject:
General
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