Jun 4, 2011

Japan's Phillips Curve looks like Japan

Gregor W. Smith's (2008) article in the Journal of Money, Credit and Banking:
During the past 15 years Japan has experienced unprecedented, high unemployment rates and low (often negative) inflation rates. Japan's Phillips Curve is shown in the right-hand panel of Figure 1… Someone once said that a country's institutions and history are reflected in its Phillips Curve. For ease of viewing, the left-hand panel of Figure 1 rotates the Phillips Curve around the vertical axis... Clearly visible are the islands of Hokkaido and Honshu, though it is somewhat difficult to separately distinguish the southern islands of Kyushu and Shikoku. The Noto-Hanto Penninsula is evident to the north of the southern end of the main island of Honshu. Tokyo Bay is also visible... This research shows that the outcomes of the past 15 years were predictable as part of a stable, readily recognized Phillips curve. Further research work on Phillips curves and the new macroeconomic geography will focus on Chile.

ht: Yoram Baumam, the world's only [private sector] stand-up economist, who lists funny economic articles on this page.

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