We find that measures of the distribution of relative price changes are significant when included in a standard model of the UK Phillips curve based on time dependent price adjustment. Since the inclusion of these variables is not implied by this model but is implied by a state-dependent model of price adjustment or by a time-dependent model with allowance for heterogeneity among price-setters, we conclude that the familiar time-dependent model does not provide a complete account of the Phillips curve.
|Number of pages||7|
|Publication status||Published - 11 Jul 2010|
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)