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Author(s): Álvaro Aguiar
Manuel Mota Freitas Martins
Title: Trend, Cycle, and Non-linear Trade-off in the Euro Area 1970-2001 (FEP Working Paper Nº 122, Faculdade de Economia da Universidade do Porto, Março 2003)
Issue Date: 2003
Abstract: This paper presents new tests and estimates of the Phillips trade-off in the Euro Area, carried out in a unobserved components model with possibly non-linear Phillips and Okun relations, using quarterly aggregate data for the period 1970:I-2001:II. A concept of forward-looking near-rational expectations is introduced in the model, improving on the contradiction between rational expectations and evidence of inflation inertia. The Phillips curve turns out to be linear and its trade-off statistically significant, while non-linearity shows up in the Okun relation.The trend-cycle decompositions capture the main features of the Euro Area recente macroeconomic record.
Subject: Economia, Economia e gestão
Economics, Economics and Business
Scientific areas: Ciências sociais::Economia e gestão
Social sciences::Economics and Business
Document Type: Trabalho Académico
Rights: openAccess
Appears in Collections:FEP - Trabalho Académico

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