Title: Phillips Curve: Forward or Backward Looking?
Abstract: We estimate both a forward looking and a hybrid New Keynesian Phillips Curve using Generalized Method of Moments (GMM).the findings suggest that inflation is persistent phenomenon in Pakistan and past inflation is having significant explanatory power. Contrary to conventional wisdom, the output gap is not statistically significant in explaining inflation in Pakistan. We also analyze the change in inflation dynamics across time. Results are robust when different proxies are used for output gap. It can be concluded that inflation is both backward looking and forward looking in Pakistan.
Publication Year: 2011
Publication Date: 2011-01-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 5
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