Can the New Keynesian Phillips Curve Explain Japanese Inflation Dynamics?: A Labor Share Correction Approach
Institute for Monetary and Economic Studies, Bank of Japan, 2006 - 26 pagina's
We estimate a New Keynesian Phillips curve (NKPC) for Japan's economy. To obtain a better proxy of real marginal cost (RMC), we correct labor share by incorporating labor adjustment costs, material prices, and real wage rigidity. Our approach is unique in utilizing the information on firms' judgment about the labor gap, which implies the existence of labor adjustment costs. Our results show that the NKPC explains Japanese inflation dynamics quite well if we use the corrected proxy of RMC. Furthermore, we find that Japanese inflation persistence is mostly accounted for by the persistence of RMC itself rather than lagged inflation.--Publisher's description.
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Imperfect Common Knowledge, Staggered Price Setting, and the Effects of ...
Fragmentweergave - 2006
adjustment cost function American Economic Review AULC Batini better proxy calculate RMC closed-form solution compensation of employees correct labor share Costs and Material dependent variable derive the relationship estimate the Japanese estimation method existence of labor explain Japanese inflation flexible prices follows gap under flexible gap under sticky GDP deflator non-annualized gross output Hybrid NKPC Including Labor Adjustment incorporating labor adjustment inflation persistence influence of material information on firms Japan Japanese inflation dynamics Japanese NKPC Journal of Monetary Keynesian Phillips Curve labor adjustment costs labor gap lagged inflation term marginal cost Mark Gertler markup material input material prices method is NLS Michael Woodford Monetary Economics Nickell NKPC is based NKPC with labor NKPC with RMC number of workers optimal number proxy of RMC rate of substitution real wage rigidity relationship between labor RMCt Rudd and Whelan Section share by incorporating specifications Stephen Nickell sticky prices t-value value added