Inflation and Philips Curves: Key Studies

Question 1

ECB Objective (1999)

Answer 1

“Primary objective of the ECB is maintenance of price stability”

Question 2

Barnanke

Answer 2

Central bank independence tend to deliver better inflation outcomes without compromising economic growth

Question 3

Akerlof (1996)

Answer 3

Lowering inflation from 3% to 0% in US would result in higher unemployment and lower output.

Question 4

Anderson et al (2015) - Equation

Answer 4

GRWTH = Dummy1(IT) + Beta1(GAP) + Beta2(PY) + Beta3(DEBT) + Beta4(PR) + Beta5(GRWTHt-1) + U

Higher growth in IT regimes.

Question 5

Anderson et al (2015)

Answer 5

No LR trade off between U and Inflation

IT superior to money supply targeting due to money supply instabilities

Little to no role for active fiscal policy

Question 6

Frankel

Answer 6

IT “evidently passed away in September 2009”

Question 7

Ball and Mazumder (2016)

Answer 7

Past inflation rates effect expected inflation.

Imports and Globalisation result in a fall in NAIRU over time.

Question 8

Bell and Blanchflower

Answer 8

Unemployment measurement / NAIRU falling

Underemployment

Question 9

Forbes (2019)

Answer 9

PC has not disappeared by relative flattening.

Variation between countries and employment reflected in exposure to globalisation.

Question 10

Bean (2019)

Answer 10

Very good monetary policy targeting resulted in lower PC and Inflation