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Asymmetric output‐gap effects in Phillips Curve and mark‐up pricing models: Evidence for the US and the UK
Author(s) -
Clements Michael P.,
Sensier Marianne
Publication year - 2003
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/1467-9485.5004001
Subject(s) - economics , phillips curve , output gap , econometrics , inflation (cosmology) , sign (mathematics) , robustness (evolution) , index (typography) , keynesian economics , monetary policy , mathematics , mathematical analysis , biochemistry , chemistry , physics , theoretical physics , gene , world wide web , computer science
A number of studies have found an asymmetric response of consumer price index inflation to the output gap in the US in simple Phillips curve models. We consider whether there are similar asymmetries in mark‐up pricing models, that is, whether the mark‐up over producers' costs also depends upon the sign of the (adjusted) output gap. The robustness of our findings to the price series is assessed, and also whether price‐output responses in the UK are asymmetric.