Antonio, Paradiso and Kumar, Saten and Rao, B Bhaskara (2011): A New Keynesian IS Curve for Australia: Is it Forward Looking or Backward Looking?
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This paper estimates the forward looking, backward looking and an extended version of the New Keynesian IS curve for Australia. The validity of these models is investigated by imposing the constraint on real rate of interest and as well as when the constraint is relaxed. Two measures of output gap viz. GAP1 (constructed using the unobserved components approach) and GAP2 (constructed using a quadratic trend) are utilized. Our results suggest that the baseline backward looking and forward looking models are overwhelmingly rejected by the data. Evidence strongly supports for the extended backward looking model (with GAP2) being relevant for monetary policy analysis.
|Item Type:||MPRA Paper|
|Original Title:||A New Keynesian IS Curve for Australia: Is it Forward Looking or Backward Looking?|
|Keywords:||New Keynesian IS curve; Backward looking; Forward looking; Australia|
|Subjects:||C - Mathematical and Quantitative Methods > C0 - General > C02 - Mathematical Methods
C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C12 - Hypothesis Testing: General
|Depositing User:||Saten Kumar|
|Date Deposited:||09. Dec 2011 14:18|
|Last Modified:||13. Feb 2013 10:02|
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