The Time-Varying Tradeoff between Inflation and Unemployment: Evidence from SAARC Economies with a State Space Approach
Thanabalasingam Vinayagathasan & Xiangcai Meng
What the paper says
This paper contributes to the literature by examinig the charcetristics of the time-varying relationships between inflation and unemployment with a monthly dataset from four South Asian Association for Regional Cooperation (SAARC) economies: Sri Lanka, India, Pakistan, and Bangladesh. Employing a state space approach with Kalman filter and iterative methods, an extended canonical Phillips curve is estimated for each economy. Our empirical results reveal several new characteristics about the time-varying inflation-unemployment tradeoffs. First, all the estimated changing slopes of the Phillips curves exhibit cyclical fluctuations with different amplitutes and lengths. Second, no clear common trend was detected in the estimated time-varying tradeoffs between inflation and unemployment in these four economies. Third, the estimated slopes of the Phillips curves continued to fluctuate after 2010. Policy makers should consider these identified common and idiosyncratic charcateristics when designing macroeconomic policies in developing economies such as SAARC.
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 0.00 × 0.4 = 0.00 |
| M · momentum | 0.20 × 0.15 = 0.03 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.