• KDI Journal of Economic Policy
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• v.38 no.2
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• pp.1-20
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• 2016

In this paper, we conduct uniform inference of two widely used versions of the Phillips curve, specifically the random-walk Phillips curve and the New-Keynesian Phillips curve (NKPC). For both specifications, we propose a potentially time-varying natural unemployment (NAIRU) to address the uncertainty surrounding the inflation-unemployment trade-off. The inference is conducted through the construction of what is known as the uniform confidence band (UCB). The proposed methodology is then applied to point-ahead inflation forecasting for the Korean economy. This paper finds that the forecasts can benefit from conducting UCB-based inference and that the inference results have important policy implications.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.2
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• pp.65-75
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• 2021

This study analyzes the validity of the Phillips curve with regards to Turkey. The existence and direction of the causality relationship (reason-outcome relationship) between unemployment and inflation is investigated using inflation and unemployment data for the period 1980-2019. Unit root tests were utilized to evaluate the stationarity of the series. In line with the Zivot-Andrews unit root test, which was developed in response to the criticism of the failure of studies that presented macro-variables like inflation to consider traditional unit root tests, in this research, the Engle-Granger cointegration test was implemented to check whether the series could perform a joint action, and, finally, the Granger causality relationship was explored. According to the results of the analysis, over the relevant period there was a single directional causality relationship from inflation toward unemployment in Turkey. The importance of this relationship at the 10% significance level indicates the existence of many different factors that affect inflation and unemployment. Given the existence of a cointegration and causality relationship between inflation and unemployment, it can be said that, in Turkey, the Phillips curve is valid for the period 1980-2019 and that an increase of 1% in inflation will reduce the unemployment rate by 0.028%.

• KDI Journal of Economic Policy
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• v.43 no.2
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• pp.81-101
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• 2021

This paper estimates the expectation-augmented Phillips curve, which explains inflation dynamics, in Korea. The phenomenon of low inflation in Korea has been going on for quite some time, in particular since 2012. During the Covid-19 crisis, due to low inflation expectations the operation of monetary policy was limited as the base rate approached the zero lower bound. The main objective of this paper is to estimate where and how tightly inflation expectations are anchored. It was found that long-term inflation expectations fell to around 1%, falling short of the inflation target, and that inflation expectations are strongly anchored to long-term expectations, which implies that the low inflation phenomenon is likely to extend into the future. The results also imply that even if inflation fluctuates due to temporary disturbances, it may converge to a level below the inflation target. The slight rebound of long-term expectations during the Covid-19 crisis suggests that the aggressive monetary policy may have contributed to improving economic agents' beliefs about the commitment of monetary authorities to inflation stability. This may also help long-term expectations gradually to approach the inflation target.

• Journal of Korea Society of Industrial Information Systems
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• v.19 no.3
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• pp.75-85
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• 2014

This paper is to develop and estimate a closed form inflation model using the estimates for real marginal costs in manufacturing industries during the sample period 1975-2010. The production function in manufacturing industry incorporates labor, capital, domestic material, and foreign material, assuming constant returns to scale technology and AR(1) process of technological coefficient. We derive real marginal costs from firm's cost minimization with quarterly data and provide new evidences on the new Keynesian Phillips curve for Korea. The main empirical result is that the closed form coefficients ${\delta}_1$ and ${\delta}^{-1}_2$ in manufacturing for PPI inflation proved to be 0.5086 and 0.8779 respectively, similar to the estimates in the U.S. case. These results also are consistent with the functional relationship between the coefficients in hybrid model and its closed form. Thus the paper suggests that the empirical studies on inflation dynamics need to focus on the manufacturing industry with market power, treating PPI inflation as the dependent variable.

• Biotechnology and Bioprocess Engineering:BBE
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• v.11 no.6
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• pp.484-488
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• 2006

Alteration of illumination with optimum carbon dioxide fixation-based curve in this research successfully enhanced the $CO_{2}-fixation\;(q_CO_{2}$ capability of Chlorella vulgaris Buitenzorg cultivated in a bubble column photo bioreactor. The level of $CO_{2}$ fixation was up to 1.91 times that observed from cultivation with intensification of illumination on an optimum growth-based curve. During 144 h of cultivation, alteration of light intensity on an optimum $CO_{2}-fixation-based$ curve produced a $q_CO_{2}$ of $12.8\;h^{-1}$. Meanwhile, alteration of light intensity with a growth-based curve only produced a $q_CO_{2}$ of $6.68\;h^{-1}$. Increases in light intensity based on a curve of optimum $CO_{2}-fixation$ produced a final cell concentration of about 5.78 g/L. Both cultivation methods were carried out under ambient pressure at a temperature of $29^{\circ}C$ with a superficial gas velocity of $2.4\;m/h(U_{G}$. Cells were grown on Beneck medium in a 1.0 L Bubble Column Photo bioreactor illuminated by a Phillips Halogen Lamp (20 W/12 V/50 Hz). The inlet gas had a carbon dioxide content of 10%.

• The Journal of Industrial Distribution & Business
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• v.9 no.3
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• pp.19-29
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• 2018

Purpose - This study empirically analyses the changes in unemployment rates to understand push factors of generating wage pressure and how it affects the aggregate demand in Korea and the United States. We use a structural macroeconomic model which is centered on the labor market and simultaneously explains the natural rate of unemployment and deviations. Research design, data and methodology - We attempt to empirically analyse the unemployment rates through two countries to analyse the economic effects of real wages and aggregate demand between 2000 and 2016. We introduce having estimated the whole model that the growth of unemployment into the part caused by each of these factors. Results - The results of this study show that in the long run, there is not only a natural level of employment but also a natural level of real demand are positively related. in the short run, demand can vary from bring about changes in employment by means of price or wage surprises. Conclusions - The pressure of demand in the labor market shows up strongly in both countries. The estimated labor-demand equation are consistent with this framework and generally have well defined real wage and demand effects.

• KDI Journal of Economic Policy
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• v.31 no.1
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• pp.1-25
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• 2009

This paper attempts to estimate the natural rates of output and interest of Korea in a simple DSGE set-up with a few stylized New Keynesian features using Bayesian methods. The major findings of this paper are as follows. First, the estimates of output gaps are less volatile than the measures from conventional approaches, although they exhibit non-negligible variations depending on the model specification. Another key finding is that the hybrid type Phillips curve with a backward-looking component and/or habit formation in consumption may play an important role in characterizing the macroeconomic dynamics of Korea.

• KDI Journal of Economic Policy
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• v.36 no.3
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• pp.95-120
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• 2014

This paper attempts to demonstrate the critical role of expectation horizons in economic agents building their expectations for the future. It starts with the analysis of what constraints the economics-based assumption related to information efficiency could impose in the stochastic process, and then suggests a new concept, random revision of expectation, to refer to the case when the adjustment process of expected variables employs newly generated information only. According to the inflation dynamics formula drawn under this condition, the demand pressure measured by output gap is found to cause different impacts on inflation according to different expectation horizons. The empirical analysis of this model using the data on Korea reveals that a short expectation horizon causes coefficient estimates to become small and statistically less significant.

• The Journal of Asian Finance, Economics and Business
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• v.6 no.2
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• pp.269-275
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• 2019

This study intended to examine the relationship between inflation and unemployment rate in Indonesia during 1987 to 2018 period. The study applied a quantitative method using Vector Error Correction Model (VECM) in order to comprehensively understand the causality between inflation and unemployment rates. The data were collected from various main sources including the World Bank, Central Bank of Indonesia, and Central Bureau of Statistics (BPS). The findings showed that inflation has a one-way relationship toward unemployment in Indonesia and it occurs at the third lag. Impulse Response Function (IRF), shows that the inflation rate are fluctuating in response to the shock of unemployment. The unemployment rate responses to shocks from inflation initially increased until it is eventually diminished. It shows that the shocks caused by the impact of inflation were only in the short term. Further, inflation in the three previous lags will have consequences for the unemployment rate in the year. Lastly, both in the long run and short run, unemployment did not affect inflation rates. These findings suggest that high inflation in Indonesia is determined the rising price of basic commodities and fuel. In addition, most companies in Indonesia applying capital intensive so that employment growth in Indonesia is small.

• International Area Studies Review
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• v.14 no.3
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• pp.157-177
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• 2010

This study analyzes the effect of fiscal decentralization on economic growth by using each province city's panel data of China from 1985 to 2008. By using Recently developed fiscal decentralization index and autonomy of local government quantified this study finds the following conclusions. The increase of inflation rate affects positive effect on Chinese economy. This is the trade-off relationship with the growth of Chinese economy by the Phillips Curve theory. So this suggests the instability of Chinese economy. The affiliation of WTO of China shows positive effect on Chinese economy. This can be translated as the real evidence about free trade theory of Classical School. Expenditure decentralization in China led to economic growth and revenue decentralization also affected positively although it was not as much as expenditure decentralization's effect. Central tax and local tax negatively influenced economic growth; and differently from our expectation, local government autonomy quantified was not relevant to economic growth.