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Zur Zeitstabilität des Phillips-Theorems
Woll, Artur | Faulwasser, Bernd | Ramb, Bernd-Thomas
Credit and Capital Markets – Kredit und Kapital, Vol. 9 (1976), Iss. 3 : pp. 293–316
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Woll, Artur
Faulwasser, Bernd
Ramb, Bernd-Thomas
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Abstract
Summary The Temporal Stability of the Phillips Theorem
The question of whether the Phillips theorem exhibits a stable trade-off between the economic policy objectives of full employment and price level stability is the subject of theoretical and empirical debate. Available empirical appraisals of theoretical positions deliver contradictory results. Above all, they are not in a position to carry out a systematic study of the stability of ıhe implied relationships. To remedy this defect, in this article the stability of Phillips relations is tested with the help of the econometric ‘moving subperiod’ method. The ‘moving subperiod method’ sets out from the assumption that the choice of the observation period has a substantial influence on the results of empirical tests In order to check systematically in what subperiods significant and stable relations exist, the entire period under study is covered with overlapping subperiods for each of which the regression estimate is calculated individually. From the trend of the resulting correlation coefficients it is possible to read off when the explanatory content of the relations is significant and stable. With the help of this method - on the basis of quarterly data - the Phillips theorem is tested for the Federal Republic of Germany in the period from 1953 to 1974. Various labour market aggregates and price expectations are used as explanatory variables of the inflation rate, From the two groups of exogenous variables, characteristic paths of the explanatory relationships are selected and compared. The results show that no explanatory magnitude has a permanent, stable and unequivocal relation to the inflation rate. Particularly for the relationship between underemployment and inflation, there is no stable trade-off over time. This objective conflict, therefore - despite all incantations - cannot serve as a basis for politically rational action.