Using a panel data set for OECD countries we replicate the typical features of the New Keynesian Phillips curve models (NPCs) that have been estimated on country data. While this corroborates the NPC also on the macro panel data set, a different conclusion is reached when we test whether the NPC encompasses an existing model of inflation which is without feed-forward terms, but which allows for other adjustment factors than the NPC. We find that the NPC?s expected rate of future inflation and real marginal costs are weak explanatory variables, and that their statistical significance in the typical NPC is due to correlation with the equilibrium correction terms that are implied by the existing inflation model. Our results are in line with the relatively few encompassing studies that exist on country and area data. --New Keynesian Phillips curve,forward-looking price setting,panel data model,encompassing
Although coordination of wage bargaining probably affects entry barriers and competition in product markets, research on price determination has typically not considered such factors. We argue that the price markup depends on wage setting institutions and present empirical evidence in form of estimated price equations in a panel of 15 OECD countries. The estimates show that consumer prices may be as much as 21 percent higher in coordinated compared to uncoordinated countries, solely due to the effect of coordination on the markup. Since other studies find that coordination has a dampening effect on wages, this may explain why there is no clear effect of coordination on unemployment.JEL C23, E31, J51
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