Policy regimes and the shape of the Phillips curve in Australia |
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| Affiliation: | 1. University of Calabria, Department of Economics, Statistics and Finance “Giovanni Anania”, Arcavacata di Rende, Cosenza, Italy;2. Bank of Italy, Catanzaro Branch, Catanzaro, Italy;3. Bank of Italy, Directorate General for Economics, Statistics and Research – Structural Economic Analysis Directorate – Economic History and Historical Archive Division, Rome, Italy;1. Department of Economics, Durgapur Government College, West Bengal 713214, India;2. Department of Humanities and Social Sciences, National Institute of Technology Durgapur, West Bengal 713209, India;1. Ghent University, Sint-Pietersplein 5, 9000 Gent, Belgium;2. European Central Bank, Sonnemannstrasse 20, 60314 Frankfurt am Main, Germany;1. Centro de Estudios Económicos, El Colegio de México, Carretera Picacho Ajusco No. 20, Col. Ampliación Fuentes del Pedregal, Delegación Tlalpan, Mexico City C.P. 10740, Mexico;2. Department of Economics, University of Reading, Whiteknights, Reading RG6 6AA, United Kingdom;3. Oesterreichische Nationalbank, Economic Analysis Division, Otto Wagner Platz 3, A-1090, Vienna, Austria |
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| Abstract: | We document an evolving pattern in the slope of the Phillips curve in Australia at different frequencies under different monetary policy regimes and labor market regulations. Our estimation strategy relies on the spectral analysis that includes the gain and phase spectrum but is also complemented by the time domain estimation. We document an upward sloping medium-run Phillips curve in the pre-1977 period, a downward sloping long-run Phillips curve from 1977 to 1993, and a flattened Phillips curve from 1993 onwards. Lag and lead relationship between inflation and unemployment varies across periods and frequencies. The Phillips curve at business-cycle frequencies is downward sloping in all periods. We explain our results in terms of the monetary targeting in 1976 and the inflation targeting in 1993 by the RBA, respectively, and important changes in labor relations from the mid-1980s to the mid-1990s. |
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| Keywords: | Phillips curve Long-run Business-cycle Frequency Spectral method E24 E31 E32 C49 |
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