The Moroccan New Keynesian Phillips Curve : A Structural Econometric Analysis
The Phillips curve is central to discussions of inflation dynamics and monetary policy. In particular, the New Keynesian Phillips Curve is a valuable tool to describe how past inflation, expected future inflation, and real marginal cost or an outpu...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/960631568727358615/The-Moroccan-New-Keynesian-Phillips-Curve-A-Structural-Econometric-Analysis http://hdl.handle.net/10986/32426 |
| Summary: | The Phillips curve is central to
discussions of inflation dynamics and monetary policy. In
particular, the New Keynesian Phillips Curve is a valuable
tool to describe how past inflation, expected future
inflation, and real marginal cost or an output gap drive the
current inflation rate. However, economists have had
difficulty applying the New Keynesian Phillips Curve to
real-world data due to empirical limitations. This paper
overcomes these limitations by using an
identification-robust estimation method called the Tikhonov
Jackknife instrumental variables estimator. Data from
Morocco are used to examine the ability of the New Keynesian
Phillips Curve to explain Moroccan inflation dynamics. The
analysis finds that by adding more information to the hybrid
version of the New Keynesian Phillips Curve model by
increasing the number of moment conditions, the inflation
dynamics in Morocco can be well-described by the New
Keynesian Phillips Curve. This framework suggests that the
New Keynesian Phillips Curve would be a strong candidate for
short-run inflation forecasting. |
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