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INTRACOUNTRY EVIDENCE ON THE LUCAS VARIANCE HYPOTHESIS
Author(s) -
KATSIMBRIS GEORGE M.
Publication year - 1990
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1990.tb00830.x
Subject(s) - economics , inflation (cosmology) , econometrics , aggregate (composite) , variance (accounting) , aggregate supply , aggregate demand , sample (material) , keynesian economics , monetary policy , materials science , physics , accounting , theoretical physics , composite material , chemistry , chromatography
Intracountry time‐series evidence for a sample of thirty‐nine countries fails to provide strong support for the basic implications of the Lucas aggregate supply model, namely: there exists a negative relationship between the output‐inflation tradeoff and the variability of both nominal aggregate demand and the rate of inflation, and a positive relationship exists between the variabilities of the inflation rate and aggregate demand. The findings differ from those of most of the previous cross‐sectional studies, which found support for the Lucas variance hypotheses, but are consistent with Froyen and Waud's [1980; 1984].