Extended “Dual Sticky” Philips Curve: Theoretical Framework and Empirical Analysis Based on China’s Data
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| Title | Extended “Dual Sticky” Philips Curve: Theoretical Framework and Empirical Analysis Based on China’s Data
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| Author | Lou Feng and Li Xuesong |
| Organization | Institute of Quantitative & Technical Economics, Chinese Academy of Social Sciences |
| Email | Loufeng@cass.org.cn;xsli@cass.org.cn |
| Key Words | Inflation; Philips Curve; Dual Sticky; Chinese Economy |
| Abstract | In recent years the new developed “Dual Sticky Phillips Curve” model divides all enterprises into two types: sticky price firms and sticky information firms. However, the hypothesis is inconsistent with the actual situation of Chinese enterprises, since that there are some public welfare enterprises and Monopoly enterprises whose prices are rigid in a long period in China. So, the paper extends the types of firms and builds an expanded analysis framework of “dual sticky” Philips curves, then, based on GMM method, the paper estimates the model with Chinese data and also compares the estimation results of the extended “Dual Sticky” model with those of pure sticky price Philips model and sticky information Philips models. The research result shows that the expanded “Dual Sticky” Phillips curve is more suitable to describe and reveal the historical development path of inflation with a good robustness and consistency. |
| Serial Number | WP664 |
| Time | 2014-08-22 |
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