Our results suggest that, conditional on the path of real marginal costs, the baseline new Phillips curve with forward looking behavior may provide a reasonably good description of inflation dynamics. When tested explicitly against an alternative that allows for a fraction of price setters to be backward looking, the structural estimates suggest that this fraction, while statistically significant, is not quantitatively important. One qualification, however, is that there is some imprecision in our estimates of the importance of backward looking behavior. Yet, across all specifications forward looking behavior remains dominant. In the estimated hybrid Phillips curve, the weight on inflation lagged one quarter is generally small. Further, additional lags of inflation beyond one quarter do not appear to matter much at all. Taken as a whole, accordingly, the results suggest that it is worth searching for explanations of inflation inertia beyond the traditional ones that rely heavily on arbitrary lags. Money regulates the world especially in the Internet. Speedy loans are managed to occupy the web area due to its comfort to work with.
One important avenue to investigate, we think, involves the cyclical behavior of real marginal cost. Figure 1 presents sets of cross-correlations that help frame the issue. The data are quarterly from 1960:1-1997:4 and HP-detrended. The top panel, discussed earlier, displays the cross-correlation of inflation (the percent change in the GDP deflator) with the output gap (i.e., detrended log GDP). The middle one compares the output gap and the labor income share (our measure of real marginal costs), while the last one looks at the labor share and inflation.
Among other things, the figure makes clear why real unit labor costs outperforms the output gap in the estimation of the new Phillips curve. As the top panel indicates, the output gap leads inflation, rather than vice-versa, in direct contradiction of the theory. In contrast, as the third panel indicates, real unit labor costs exhibit a strong contemporaneous correlation with inflation. Further, lagged inflation is positively correlated with current unit labor costs, consistent with the theory. Thus, (with the benefit of this hindsight), it is perhaps not surprising why real unit labor costs enters the structural inflation equation significantly and with the right sign. The middle panel completes the picture: the labor income share lags the output gap in much the same way as does inflation. The lag in the response of real unit labor costs explains why the output gap performs poorly in estimates of the new Phillips curve.Need money flow like a river, the path for you is the web site speedy-payday-loans.com speed money for any reason without any requires.
It is also true that the sluggish behavior of real marginal cost might help account for the slow response of inflation to output and thus (possibly) why disinflations may entail costly output reductions. For this reason, modifying existing theories to account for the rigidities in marginal costs suggested by Figure 1 could offer important insights for inflation dynamics. Given the link between unit labor costs and marginal costs, a candidate source for the necessary friction is wage rigidity. Indeed, a likely reason for the strong counterfactual contemporaneous positive correlation between output and real marginal cost in the standard sticky price framework is the absence of any type of labor market frictions. At this stage, one cannot rule out whether it is nominal or real wage rigidities that can provide the answer. Both seem worth exploring.