Quaas, Georg and Klein, Mathias (2010): Is the Phillips Curve of Germany Spurious?
Download (114kB) | Preview
A simple plot of seasonal adjusted quarterly data between the change of nominal wage rates and the unemployment rate for the German economy shows a picture similar to that by which Phillips was inspired to his famous discovery, that there is a long-term tendency of a negative, non-linear relationship coupled with minor deviations from this tendency, which form so-called loops. At first sight, the Phillips Curve of Germany comprises clusters of data points and movements between these clusters. In spite of the striking differences of these phenomena, a model with one regression equation is sufficient to explain the loops, the movements between the loops and the long-term tendency of the German Phillips Curve. It might well be that the German Phillips Curve and the corresponding regressions are spurious, but an allegedly missing co-integration of wage rate changes and unemployment rate is not the argument that could be drawn on to sustain this scepticism. On the contrary, both variables are co-integrated. To get a more detailed insight into the relationship, the two variables are split into a trend and a cyclical component by the help of the HP-filter. The results of regression analyses applied to the separated components support Phillips’ hypothesis of a negative relationship between wage rate changes and the unemployment rate.
|Item Type:||MPRA Paper|
|Commentary on:||Quaas, Georg and Klein, Mathias (2010): Clusters and Loops of the German Phillips Curve.|
|Original Title:||Is the Phillips Curve of Germany Spurious?|
|Keywords:||Wages, Unemployment, Phillips Curve|
|Subjects:||E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity
E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E13 - Neoclassical
|Depositing User:||Georg Quaas|
|Date Deposited:||10. Nov 2010 15:50|
|Last Modified:||13. Mar 2015 15:40|
Dobusch, L. / Kapeller, J. (2009), Why is Economics not an Evolutionary Science? New Answers to Veblen’s Old Question, Journal of Economic Issues 43, 867-898.
Eckstein, O. / Wilson, T. A. (1962), The Determination of Money Wages in American Industry, Quarterly Journal of Economics 76, 379-414.
Galí, J. (2010), The Return of the Wage Phillips Curve.
Granger, C. W. J. (1981), Some Properties of Time Series Data and their USE in Econometric Model Specification, Journal of Econometrics 16, 121-130.
Gruen, D. / Pagan, A. / Thompson, C. (1999), The Phillips curve in Australia, Journal of Monetary Economics 44, 223-258.
Intriligator, M., Econometric Models, Techniques and Applications. Amsterdam 1978.
Kuh, E. (1967), A Productivity Theory of Wage Levels – An Alternative to the Phillips Curve, Review of Economic Studies 34, 333-360.
Lipsey , R. G. (1960), The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1862-1957: A Further Analysis, Economica 27, 1-31.
Outhwaite, W., New Philosophies of Social Science. London 1987.
Phelps, E. S. (1967), Expectations of Inflation and Optimal Unemployment over Time, Economica 34, 254-281.
Phillips, A. W. (1958), The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957, Economica 25, 283-299.
Quaas, G. / Klein, M. (2010), Clusters and Loops of the German Phillips Curve. MPRA-Paper #23094, published at 06-06-2010, http://mpra.ub.uni-muenchen.de/23094/
Samuelson, P. A. / Solow, R. M. (1960), Analytical Aspects of Anti-Inflation Policy, American Economic Review 50, 177-194.
Streit, M. E. (1972), The Phillips curve: Fact or fancy? — The example of West Germany, Review of World Economics 108, 607-633.
Quaas, Georg and Klein, Mathias
Clusters and Loops of the German Phillips Curve. (deposited 07. Jun 2010 09:44)
- Quaas, Georg and Klein, Mathias Is the Phillips Curve of Germany Spurious? (deposited 10. Nov 2010 15:50) [Currently Displayed]