INFLATION HISTORY AND THE SACRIFICE RATIO: EPISODE-SPECIFIC EVIDENCE |
| |
| Authors: | TAKASHI SENDA JULIE K SMITH |
| |
| Institution: | Senda:;Professor, Graduate School of Social Sciences, Hiroshima University, 1-2-1 Kagamiyama, Higashihiroshima 739-8525, Japan. Phone 81-82-424-7261, Fax 81-82-424-7212, E-mail
Smith:;Assistant Professor, Department of Economics and Business, Lafayette College, Simon Center, Easton, PA 18042. Phone 1-610-330-5301, Fax 1-610-330-5715, E-mail |
| |
| Abstract: | This article examines whether episode-specific analysis can show a negative relationship between inflation and the slope of the Phillips curve that has been found in cross-country analysis. While the relationship between inflation and the Phillips curve slope is widely accepted from cross-country analysis, it has remained unproven in previous episode-specific studies. By defining inflation history as a weighted average of past inflation, this study finds a negative effect of inflation history on the sacrifice ratio, which is what is expected from the cross-country analysis. The negative relationship does not disappear even after including other conventional determinants of the sacrifice ratio. ( JEL E52, E31) |
| |
| Keywords: | |
|
|
