Introduction to the New Keynesian Phillips Curve

Hornstein, Andreas
September 2008
Economic Quarterly (10697225);Fall2008, Vol. 94 Issue 4, p301
Academic Journal
The article discusses the New Keynesian Phillips curve (NKPC) including its history, structural estimation, and its implications of the nominal rigidities. It notes that statistical relationship between inflation and unemployment is correlated to low employment outcomes. It mentions that policymakers agreed that the objective effect of monetary policy should be low and constant inflation in 1970. However, results of a survey show that NKPC has no agreement on nominal price rigidities in the aggregate economy. Furthermore, it suggests that research between the relevance of unemployment and inflation will remain as an active theory in the area of macroeconomics.


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