Announcements

ECONOMICS SEMINAR - Geert Mesters

Author: CASE
Time: 16:00
Location: CASE 127

KOC UNIVERSITY
FACULTY OF ADMINISTRATIVE SCIENCES AND ECONOMICS
ECONOMICS SEMINAR

Wednesday, 18 April 2018

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Speaker  : Geert Mesters - Universitat Pompeu Fabra

Title        :  The Phillips Multiplier

Time       : 16:00-17:30
Place      : CASE 127

Date       : 18 April –Wednesday

Abstract: We define the Phillips multiplier as the cumulative change in inflation caused by an aggregate demand shock that increases unemployment by one percentage point. The Phillips multiplier allows us to characterize the dynamic inflation/unemployment trade-off independently of any specific Phillips curve specification, and its estimation is immune to many of the empirical issues affecting the Phillips curve. Using monetary shocks and government spending shocks as proxies for aggregate demand shocks, we estimate a Phillips multiplier for the United States. We obtain three main results: (i) the multiplier is negative, consistent with the existence of an inflation-unemployment trade-off, (ii) the multiplier can appear temporarily muted, because of the inertial nature of inflation, (iii) the multiplier was large (in absolute value)  in the 70s but declined swiftly and substantially in the early 80s.