TY - JOUR
T1 - MODELING the PHILLIPS CURVE in CHINA
T2 - A NONLINEAR PERSPECTIVE
AU - Zhang, Lingxiang
N1 - Publisher Copyright:
© 2016 Cambridge University Press.
PY - 2017/3/1
Y1 - 2017/3/1
N2 - This paper investigates the nonlinear dynamics of the inflation-output type of Phillips curve based on a multiple-regime smooth transition regression model using data from China. The empirical results indicate significant nonlinearities in China's Phillips curve. The relationship between inflation and output can be modeled by a four-regime smooth transition regression model in which the responses of inflation to output depend on both inflation and economic growth rates. The inflation-output type Phillips curve may be positively sloped, negatively sloped, or even vertical in the short term, depending on different business cycles. Furthermore, we analyze business cycle fluctuations based on the nonlinear Phillips curve, indicating a coexisting zone of stable inflation rate and rapid growth rate.
AB - This paper investigates the nonlinear dynamics of the inflation-output type of Phillips curve based on a multiple-regime smooth transition regression model using data from China. The empirical results indicate significant nonlinearities in China's Phillips curve. The relationship between inflation and output can be modeled by a four-regime smooth transition regression model in which the responses of inflation to output depend on both inflation and economic growth rates. The inflation-output type Phillips curve may be positively sloped, negatively sloped, or even vertical in the short term, depending on different business cycles. Furthermore, we analyze business cycle fluctuations based on the nonlinear Phillips curve, indicating a coexisting zone of stable inflation rate and rapid growth rate.
KW - Business Cycle
KW - Multiple-Regime Smooth Transition Regression Model
KW - Phillips Curve
UR - http://www.scopus.com/inward/record.url?scp=84969983811&partnerID=8YFLogxK
U2 - 10.1017/S1365100515000577
DO - 10.1017/S1365100515000577
M3 - Article
AN - SCOPUS:84969983811
SN - 1365-1005
VL - 21
SP - 439
EP - 461
JO - Macroeconomic Dynamics
JF - Macroeconomic Dynamics
IS - 2
ER -