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The paper examines the current state and development of the Bulgarian economy in 2023, considering domestic and regional factors. We analyze the real sector by tracking GDP, inflation, and unemployment, linking these to EU processes. Emphasis is placed on labour market adjustments in the context of digitalization and transitioning to a climate-neutral economy. The sustainability of the fiscal sector is explored through financing the green and digital transition with EU funds, and the necessary policies to maintain fiscal stability. We discuss foreign trade prospects, considering the economic conditions and expectations for Bulgaria's main trading partners, the high dependence on euro area performance, and the specifics of foreign trade relations. The banking sector and the capital market analysis focus on the implications of European Central Bank monetary policy, regulatory actions of the Bulgarian National Bank, and risks to sector stability in a dynamic macroeconomic environment. Expectations and forecasts for the Bulgarian economy through 2026 are based on assumptions about global economic processes and local challenges. We make economic policy recommendations aimed at preserving the purchasing power of the population's income and restructuring certain fiscal measures. [ABSTRACT FROM AUTHOR]

This paper conducts a systematic comparison of two main textbook variants within the Kaleckian tradition of post-Keynesian conflict inflation and distribution theory: the Blecker and Setterfield (2019) and Lavoie (1992; 2022) (BSL) model based on Dutt (1987), and the Hein (2023a) and Hein and Stockhammer (2011) (HS) model founded on Rowthorn (1977). Focusing on a basic closed economy framework sans government, we explore various iterations of each approach. Our analysis reveals that disparities chiefly centre around the treatment of price inflation expectations ('indexation') and the incorporation of bargaining power in wage- and price-inflation equations. BSL variants generally yield stable price Phillips curves, stable distribution and employment curves, and hence stable equilibria. Only the BSL-3 variant with complete indexation and complete pass-through generates shifting Phillips and employment curves, implying instability. It is thus similar to the HS-0 approach, which has bargaining power and complete indexation representing adaptive expectations in wage inflation and incomplete pass-through in price inflation. Introducing a workers' wage share target directly into the wage-inflation equation, but keeping full indexation/adaptive expectations in wage inflation and incomplete pass-through in price inflation, allows for stable and even flat Phillips curves, stable distribution and employment curves, and hence stable equilibria in the HS approach. [ABSTRACT FROM AUTHOR]

This article undertakes a theoretical post-Keynesian analysis to explore the relationship between inflation, unemployment, and inequality. Firstly, we show the compatibility of the inequality-augmented Phillips curve, which first appeared in Rolim, Carvalho, and Lang (2023), with the post-Keynesian macroeconomic theory. The curve combines the Phillips curve, which relates unemployment and inflation and can be derived from the conflicting-claims inflation model, with the positive relation between unemployment and inequality due to the heterogeneous impact of unemployment on workers. The unemployment rate thus connects the inflation rate to income inequality in a three-dimensional relationship described by the inequality-augmented Phillips curve, which indicates a possible trade-off between low inflation and low inequality. Secondly, we consider the profits inflation case: when inflation is simultaneous with markup increases. Increases in the ex-ante markup rate shift the curve upwards, thus increasing the inflation rate and inequality. In this context, if monetary policy aims to control inflation by increasing unemployment, it will operate along the inequality-augmented Phillips curve and will further increase inequality. [ABSTRACT FROM AUTHOR]

The aim of this study is twofold: on the one hand, to provide evidence of the positive association between the inflation rate and the labor share in the US; on the other, to show that monetary policy slows inflation by depressing the labor share. With the help of Bayesian econometrics, the paper shows evidence of a conflict Phillips curve. Furthermore, a structural vector autoregressive model reveals the detrimental effects of interest rate hikes on the labor share. Together, these results mean the monetary policy of administered interest rates resolves the class conflict in favor of capital to control inflation. Scrutiny of the US monetary policy development and a model of a controlled predator-prey system prepare the way for the empirical sections. Finally, the paper concludes that controlling the distributive conflict matters for impinging on inflation and that the Fed might follow alternative monetary rules to cease being the third party participating in the distributive conflict. [ABSTRACT FROM AUTHOR]

The recent post-Keynesian debate on conflict inflation revolves around plausible magnitudes of the parameters of the standard model. We assess this debate by examining the economic meaning of the 'bargaining' and 'indexation' parameters, and proposing a reinterpretation in which the bargaining power is reflected in the relative frequency of wage and price increases in a period. Inflation then depends on the size of the inconsistent distributive claims and the absolute frequency of wage and price increases. Distribution depends on the relative frequency of such increases. From the latter we derive the real wage and profit resistance parameters, which determine the structural degree of inflation inertia. By adding the employment rate as a determinant of the desired real wage, we get a conflict-augmented Phillips curve. We show how different assumptions on the real resistance parameters affect the shape of the Phillips curve and the distributive outcomes in different conflict inflation models. A NAIRU occurs only when there is both full real wage and real profit resistance. Conflict generates inflation (not acceleration) with less extreme assumptions. The old-type conflict-augmented Phillips curve, with income distribution depending on the relative frequency of wage and price adjustments, is the most plausible case. [ABSTRACT FROM AUTHOR]

This paper presents a pedagogical guide to conflictual inflation, showing the similarities and differences between the post-Keynesian analysis and the alternative mainstream WS-PS model. Among other things, it shows the difficulties that analysts meet when they try to justify the existence of a NAIRU. Productivity growth, wage-wage inflation and the possibility of a flat Phillips curve are considered within the framework of the post-Keynesian conflicting-claims model. The paper also deals with conflictual inflation within the context of an open economy that imports intermediate goods and raw materials. [ABSTRACT FROM AUTHOR]

The tourism-led economic growth hypothesis is one of the most investigated concepts in tourism economics literature. It has been verified by many empirical studies so far. Since the concept of growth-driven inflation belongs to the fundamentals of macroeconomic theory, one could reasonably assumeinflation can also be led by tourism development. The question, however, is through what mechanisms could it be adequately identified and assessed. If anywhere, tourism-led inflation could first and foremost be perceived in a country with a significant economic impact of tourism. We take one of such countries as a case study and use the structural vector autoregression methodology to examine tourism-led inflation. The presented empirical framework may also serve as a role model applicable to other countries and regions. [ABSTRACT FROM AUTHOR]

How common are wage–price spirals, and what has happened in their aftermath? We construct a new historical database of wage–price spirals—identified as episodes with consumer price inflation and average nominal wage growth rising jointly for at least a year—going back to the 1960s for a large sample of advanced economies. We find that only about a quarter of such episodes were followed by sustained accelerations in wages and prices. Instead, nominal wage growth and inflation tended to stabilize at a higher level on average, and then gradually revert, with real wage growth broadly unchanged. A decomposition of average wage dynamics during wage–price spiral episodes using a wage Phillips curve suggests that nominal wage growth normally stabilizes at levels consistent with observed inflation and labour market tightness. After historical episodes exhibiting rising inflation, falling real wages, and tightening labour markets—similar to what was observed in the early post‐COVID‐19 recovery in 2021—inflation tended to decline and nominal wage growth to rise, allowing real wages to gradually catch up. Our findings suggest that an acceleration of nominal wages against a backdrop of rising inflation does not necessarily signal that a persistent wage–price spiral dynamic is taking hold. [ABSTRACT FROM AUTHOR]

How do capacity constraints affect the slope of the Phillips curve? In particular, do changes in output affect prices by more when firms face more strongly diminishing returns? Intuitively, one may conjecture that the answer is yes. With more strongly diminishing returns, marginal costs increase more when production increases, also raising prices by more. But this intuition is incomplete in models with sticky prices à la Calvo. In the standard New Keynesian model with Calvo pricing frictions, more strongly diminishing returns actually flatten the Phillips curve. The reason is the reluctance of firms who alter their prices to let their prices get too far out of line with the prices set by firms that do not adjust. We explain how the Phillips curve might be amended to avoid this implausible feature, for example, by using Rotemberg pricing or introducing wage stickiness. [ABSTRACT FROM AUTHOR]

We test the impact of globalization on the inflation process (global slack hypothesis) for 15 emerging economies over the period (1996Q1-2019Q4). The novelty of this article lies in testing the impact of globalization on the inflation process. We introduce the smooth transition regression (STR) model of the Phillips curve to capture the gradual impacts of globalization on inflation dynamics. The main results are as follows. (i) The asymmetries in inflation exist that are not captured by the linear Phillips curve. (ii) The domestic output gap remains a main driving force of inflation. (iii) Globalization based on the trade weighted average of the domestic output gap does not affect the inflation process compared to other variables like the trade openness, import prices, real exchange rate and international oil prices. Our results yield important implications that the central banks of the emerging economies can stabilize inflation and output gap in an effective way, exploiting the inflation-output gap relationship. When economic expansion of the trading partners increases, the process of inflation dynamics changes in two economies (Brazil, and China). [ABSTRACT FROM AUTHOR]

• Identifies factors affecting the workers' bargaining power. • Builds a composite index for the United States using the principal component analysis. • Analyses the relationship between this index and the wage share in the years 1960–2018. • Discusses the link between the workers' bargaining power and inflation. • Estimates the Phillips curve and explains why it has flattened over the last decades. This paper aims to construct a synthetic index of workers' bargaining power and investigate the relationship between it and inflation in the U.S. economy. As a first step, we identify the factors affecting the bargaining power of workers, referring to different groups of variables: labour market indicators; institutional indicators (e.g., collective bargaining coverage, union density); characteristics of the economy (e.g., degree of freedom for capital mobility, share of employment by sector). We then implement Principal Component Analysis (PCA) to assess the adequacy of the indicators and calculate the weights to aggregate the single indicators into a composite index. As a second step, we estimate the impact of our Bargaining Index on inflation by estimating an equation of the determinants of inflation. The composite index thus has a twofold use: it sheds light on the extent to which changes in the labour market in recent decades have weakened workers' bargaining power, and it can be used to test how the evolution of the wage bargaining system affects inflation. [ABSTRACT FROM AUTHOR]

Copyright of International Journal of Economics, Politics, Humanities & Social Sciences / Uluslararası Ekonomi Siyaset İnsan ve Toplum Bilimleri Dergisi is the property of International Journal of Economics, Politics, Humanities & Social Sciences and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Stable Economy Journal is the property of University of Sistan & Baluchestan and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Australia, like many other countries, experienced an unexpected surge in inflation following the COVID‐19 pandemic. This has renewed interest in the Phillips curve because of its important implications for monetary policy. We estimate the price Phillips curve in the post‐inflation targeting period using the most recent state‐level data. Identification relies on variation in regional demand that policymakers do not aim to stabilize. After controlling for cost‐push shocks and equilibrium unemployment, we obtain a modest slope of the Phillips curve and, more importantly, we do not find any steepening of the Phillips curve in the post‐COVID period. Without correct identification, the post‐COVID Phillips curve would be steeper as documented for other countries including the United States. We also find that the slope gradually decreases with the level of unemployment. [ABSTRACT FROM AUTHOR]

The slope of the Phillips curve has been shown to be flatter in recent years, including in Australia. How does this impact the optimal targeting window for a central bank conducting an average inflation targeting policy? This article shows that, in the face of the flattening of the Phillips curve, it is desirable to increase the targeting window. Doing so would lead to lower inflation fluctuations and to a non‐trivial welfare gain. In a persistently higher‐than‐target inflation, high‐interest‐rate environment, this implies that the central bank should keep the nominal interest rate higher for longer. [ABSTRACT FROM AUTHOR]

In this article, I argue that shifts in the natural rate of interest provide important insights for the New Keynesian Phillips Curve (NKPC). The deviation of the real interest rate from the natural interest rate (interest rate gap) captures the monetary policy stance, which is important for the dynamics of inflation and the output gap in the wake of persistent and permanent variation in the natural rate of interest. I present the evolution of the estimates of the Taylor‐rule consistent‐ natural interest rate, and thus the associated path of the expectations of future inflation via the Fisherian relationship. The path of these two variables has implications for estimation of the NKPC. [ABSTRACT FROM AUTHOR]

We use a time-varying panel unobserved components model to estimate unemployment gaps disaggregated by age and gender. Recessions before COVID affected men's labor market outcomes more than women's; however, the reverse was true for the COVID recession, with effects amplified for younger workers. We introduce time-variation in both the hysteresis dynamics and the Phillips-curve coefficients on labor market slack. The aggregate Phillips curve flattens over time and hysteresis is countercyclical for all groups. We find heterogeneity in both the Phillips curve and hysteresis coefficients, with wages responding more to workers with an outside option (high school- and retirement-age) and larger effects of hysteresis for younger workers. [ABSTRACT FROM AUTHOR]

Estimation of the optimal unemployment rate in accordance with the full employment of the labor force in Iran's economy for the years 69 to 1400:Achieving full employment as a long-term goal has been emphasized in the system's twenty-year vision document, and for this purpose, part of the goals, policies and measures of the country's development programs should be in accordance with the labor market goals in the vision document. to measure In this research, the estimation of the optimal unemployment rate corresponding to the full employment of the labor force in the economy of Iran for the years 1369 to 1400 was discussed. In this way, first the expected inflation rate was estimated and then the natural unemployment rate (NUR) of Iran's economy was estimated at 10.1 and the optimal unemployment rate was estimated at 7.65. Therefore, if Iran's economy is in the best condition and if the favorable conditions for the variables influencing the unemployment rate are imagined, then the unemployment rate will be lower than its natural unemployment rate. In order to reach the optimal unemployment rate, it is necessary to consider measures in the field of labor force employment. For this purpose, increasing economic growth and creating new job opportunities to create employment and employ educated and university personnel and adopting policies to improve foreign trade means using foreign capacities to export domestic goods and services and in contrast to using the capacities of Importing knowledge and technology with the aim of increasing domestic production capacity (along with increasing the scale of production) should be the key focus of the country's economic policy.

How do professionals forecast in uncertain times, when the relationships between variables that held in the past may no longer be useful for forecasting the future? For inflation forecasting, we answer this question by measuring survey respondents' adherence to their pre‐COVID‐19 Phillips curve models during the pandemic. We also ask whether professionals ought to have put their trust in their Phillips curve models over the COVID‐19 period. We address these questions allowing for heterogeneity in respondents' forecasts and in their perceptions of the Phillips curve relationship. [ABSTRACT FROM AUTHOR]

The aim of the article is to clarify the controversies surrounding the relationship between inflation and unemployment in the three most economically significant countries in the world (apart from China), namely the United States, Japan, and Germany, during the coronavirus pandemic (from January 2020 to February 2022). The pandemic has had various adverse effects worldwide, including a severe economic crisis lasting from the first quarter of 2020 to the end of the first quarter of 2021. The primary causes of this crisis include declines in aggregate supply due to lockdowns in many sectors of the economy, particularly the service sector. A decrease in aggregate supply should cause not only an increase in unemployment but also an increase in inflation. The article, therefore, hypothesises that the relationships between unemployment and inflation in the countries studied during the above period were unidirectional. To verify this hypothesis, two basic research methods were used: analysis of correlation coefficients between the variables mentioned above and the shape of Phillips curves. Ultimately, the hypothesis was rejected because inflation during this period showed a decreasing tendency (mainly due to a significant drop in commodity prices). The article extends research presented in the literature before 2020, offering additional value by examining the period of the pandemic which precipitated an economic crisis. Future analysis should be expanded to include more variables (including the output gap) in line with the New Keynesian Phillips Curve.

We develop a tractable sticky price model in which the fraction of price changes evolves endogenously over time and, consistent with the evidence, increases with inflation. Because we assume that firms sell multiple products and choose how many, but not which, prices to adjust in any given period, our model admits exact aggregation and reduces to a one-equation extension of the Calvo model. This additional equation determines the fraction of price changes. The model features a powerful inflation accelerator--a feedback loop between inflation and the fraction of price changes-that significantly increases the slope of the Phillips curve during periods of high inflation. Applied to the U.S. time series, our model predicts that the slope of the Phillips curve ranges from 0.02 in the 1990s to 0.12 in the 1970s and 1980s. JEL classification: E31, E32, E52 Key words: Phillips curve, inflation, price rigidities, 1 Introduction The recent rise in inflation in many economies has spurred considerable interest in further understanding the dynamics of prices. Identifying the causes of high inflation hinges critically on [...]

In this paper, a factor‐augmented version of the New Keynesian Phillips curve (NKPC) is assessed using a data set comprised of a large panel of European Union (EU) member countries. The factor‐augmentation is natural given that country‐level inflation rates are highly co‐moving. The presence of unattended common factors is important because it raises the issue of omitted variables bias, as the real marginal cost, which is a regressor of the NKPC, is likely to load on the same factors as inflation. One possibility here is to employ the regular instrumental variables approach. However, if the external instruments load on the same factors as the error term of the NKPC, the instruments would be invalid and the results would therefore likely be misleading. Motivated by this last observation, the present paper proposes a new estimator of the NKPC that allows for very general forms of factor dependencies and endogeneity. Our results provide evidence in support of the NKPC, but only after the presence of common factors has been appropriately accounted for. [ABSTRACT FROM AUTHOR]

We forecast US inflation with a new Keynesian Phillips curve (NKPC) in the frequency domain. Our method consists of decomposing the time series of inflation and its NKPC predictors into several frequency bands, forecasting separately each frequency component of inflation, and then summing up those forecasts to obtain the forecast for aggregate inflation. We find that (i) accurately forecasting the low frequency of inflation is, on average, crucial to successfully forecast inflation; (ii) our NKPC low‐frequency forecast model consistently and significantly outperforms the time‐series NKPC and standard benchmark models; (iii) the low frequencies of inflation expectations and unemployment are the key predictors; and (iv) optimally switching on / off the forecasts of each frequency components of inflation at each period allows to outstandingly track inflation and show that all frequencies of inflation matter. [ABSTRACT FROM AUTHOR]

The UK relationship between nominal wage inflation and the unemployment rate is unstable. Over sub‐periods of the last 160 years of turbulent data, Phillips curve slopes range from strongly negative, slightly negative, flat, slightly positive and strongly positive. Our constant‐parameter congruent model of real wages explains these instabilities, yet also implies a constant negative relationship between nominal wage inflation and the unemployment rate when corrected by its regressors. Disentangling these effects reveals that structural breaks in the real‐wage model's variables do not explain the instabilities, which instead occur during sub‐periods when some of its explanatory variables are insignificant. [ABSTRACT FROM AUTHOR]

The Phillips curve began life in 1958 as a simple curve‐fitted relationship between the rates of wage inflation and unemployment and went on to play a crucial role in the broader development of macroeconomics, giving rise to several controversies about its interpretation and role in policy‐making. Recently, the traditional narrative about its theoretical underpinnings has been called into question as a sequence of 'stories' to provide support for particular theoretical perspectives on macroeconomics. The primary aim of this paper is to challenge the conventional wisdom relating to the Phillips curve being an attested empirical relationship, by showing that the empirical evidence of the most influential papers that helped to frame the traditional narrative is untrustworthy, in the sense that the probabilistic assumptions invoked by their inferences are invalid. That is, not only the traditional theory‐driven narrative is misleading, but the empirical evidence used to corroborate it is untrustworthy. [ABSTRACT FROM AUTHOR]

In a note appearing in the August 2024 issue of History of Political Economy (HOPE), Edward Nelson argues that a passage commenting on James Forder's Macroeconomics and the Phillips Curve Myth (2014) in a 2023 HOPE article by Carlo Cristiano titled "The Early Reception of the Phillips Curve in the United Kingdom" would provide a false characterization of the economic literature and claims priority in affirming that UK policymakers did not use the Phillips curve as a menu for policy. It is shown in this reply that Nelson's reading of Cristiano's 2023 article, and more specifically of the passage commenting on Forder's 2014 book, is based on a misunderstanding. The purpose of the 2023 article was not to show that UK policymakers did not use the Phillips trade-off as a menu for policy. In that article, consensus on this point is taken for granted. It is also argued in this reply that there is no need to mention Nelson's works to affirm that UK policymakers did not use the Phillips trade-off as a policy menu and that Nelson's works are indeed very relevant, but for other reasons. [ABSTRACT FROM AUTHOR]

A series of research papers that appeared from 2000 to 2009 made the case that the UK authorities in the 1950s, 1960s, and 1970s eschewed Phillips-curve-based analysis and that, consequently, the UK Great Inflation of the 1970s should not be regarded as resulting from policymakers' pursuit of a perceived long-run inflation/unemployment trade-off. The position advanced in these 2000−2009 papers was that, instead, UK economic policy until 1979 subscribed to a nonmonetary perspective on inflation. This perspective implied UK authorities' rejection of Phillips-curve-type trade-off analysis, but it also meant that they misjudged the importance of monetary policy in inflation control, thereby compounding the country's inflation problem. When this series of papers began to appear at the start of the 2000s, the trade-off-centered interpretation of the US Great Inflation was highly prevalent and was also being applied to the UK Great Inflation. By late in the decade, however, the case—as outlined in the 2000−2009 papers—against Phillips-curve-based accounts of historical policy conduct had gained notable acceptance among central bankers and academic researchers who discussed the UK Great Inflation. This article corrects erroneous statements that the challenge to Phillips-curve-based accounts of historical UK policymaker behavior only appeared in research starting in the 2010s. [ABSTRACT FROM AUTHOR]

Copyright of International Economics / Economia Internazionale is the property of Camera di Commercio di Genova and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We derive a traditional Phillips curve (TPC) under the assumption that a fraction of firms sells output at optimal prices, while the other fraction sells at contract prices. Our derivation delivers a pricing mechanism where inflation depends on expected inflation and the real optimal price, which is the real marginal cost. The parameters of this Phillips curve have a clear structural interpretation in much the same way as its new Keynesian counterpart. Using a Leontief-type technology, our baseline TPC features expected inflation, the labour share, demand pressure and a vector of supply shocks. We estimate this TPC for five developed and five emerging market economies and find that the degree of price rigidity is significant and correctly signed in most of the economies. We conclude that this TPC is a credible rival to its forward-looking new Keynesian counterpart. [ABSTRACT FROM AUTHOR]

During the COVID-19 pandemic there were supply chain bottlenecks all over the world with regard to raw materials and intermediate products. In this article, we examine how these constraints affected labour market development. For an empirical panel analysis, we combine survey data and administrative labour market data for economic sectors in Germany. We find effects on unemployment that are noticeable but still relatively limited. The effect on short-time work, on the other hand, is revealed to be considerable. Whilst short-time work is traditionally imposed where there are slumps in demand, our results show that it is also used in the case of adverse supply shocks. While inflation is rising, this explains why the Phillips curve does not shift outward. [ABSTRACT FROM AUTHOR]

We implement a novel nonlinear structural model featuring an empirically successful frequency-dependent and asymmetric Phillips curve; unemployment frequency components interact with three components of core personal consumption expenditures (PCE)--core goods, housing, and core services exhousing--and a variable capturing supply shocks. Forecast tests verify accuracy in its unemployment--inflation trade-offs, crucial for monetary policy. Using this model, we assess the plausibility of the December 2022 Summary of Economic Projections (SEP). By 2025Q4, the SEP projects 2.1% inflation; however, conditional on the SEP unemployment path, we project 2.9%. A fairly deep recession delivers the SEP inflation path, but a simple welfare analysis rejects this outcome. [ABSTRACT FROM AUTHOR]

A procedure is outlined aiming at testing the bias due to omitted variables in vector autoregressions. The procedure consists first of filtering a vector of omitted variables and then testing the bias. The test does not rely on the availability of the omitted variables, and is based on a comparison between maximum-likelihood with Kalman filter vector autoregression and linear vector autoregression estimates. The empirical part considers two illustrative examples: a univariate regression analysis, based on the rational expectation-augmented Phillips curve; and a VAR with output, inflation and interest rates where a "price puzzle" arises. [ABSTRACT FROM AUTHOR]

The author of this article provides an example of how one might incorporate behavioral economics into teaching macroeconomics or labor economics at an undergraduate level. The focus is on two macroeconomic concepts—wage determination and the Phillips curve—and shows that the implications and conclusions of both models differ from their textbook versions, once behavioral aspects are taken into account. In order to do that, the author first presents the standard macroeconomic model in both cases, then stresses situations where homo economicus, i.e., the rationality assumption, does not hold, and finally introduces behavioral economics concepts that explain noted differences. The explanations are intertwined with small classroom experiments that can be part of the lecture and used to make the lecture more interesting and comprehensible. [ABSTRACT FROM AUTHOR]

This paper shows that job polarisation—i.e. the disappearance of routine jobs—is changing the characteristics of the labour market. This has structural implications for the relationship between inflation and unemployment, the price Phillips curve. Using data from the European Monetary Union and exploiting the fact that job polarisation accelerates during recessions, we obtain two empirical results. First, countries experiencing a bigger shift in the occupational structure during a downturn exhibit a flatter Phillips curve afterwards. Second, the occupational shifts experienced during the Great Recession and the Sovereign Debt Crisis explain more than a fourth of the flattening of the curve in the 2002–18 period. Then, using a New Keynesian model with unemployment and search and matching frictions, we highlight a channel through which labour market characteristics operate on the slope of the Phillips curve. Increasing labour market fluidity —i.e. a higher separation and hiring rate—decreases the slope of the Phillips curve. Using micro-data, we find that in the European Monetary Union non-routine jobs are more fluid. We conclude that job polarisation flattened the Phillips curve. [ABSTRACT FROM AUTHOR]

Bernanke and Blanchard use a simple dynamic New Keynesian model of wage-price determination to explain the sharp acceleration in U.S. inflation during 2021–2023. They claim that their model closely tracks the pandemic-era inflation and they confidently conclude that "... we don't think that the recent experience justifies throwing out existing models of wage-price dynamics." This paper argues that this confidence is misplaced. The Bernanke and Blanchard is another failed attempt to salvage establishment macroeconomics after the massive onslaught of adverse inflationary circumstances with which it could evidently not contend. It misrepresents American economic reality, hides distributional issues from view, de-politicizes (monetary and fiscal) policy-making, and sets monetary policymakers up to deliver significantly more monetary tightening than can be justified on the basis of more realistic model analyses. [ABSTRACT FROM AUTHOR]

The rapid emergence of artificial intelligence (AI) technology and its application by businesses has created a potential need for governmental regulation. While the federal government of the United States has largely sidestepped the issue of crafting law dictating limitations and expectations regarding the use of AI technology, US state legislatures have begun to take the lead in this area. Nonetheless, we know very little about how state legislatures have approached the design, pursuit, and adoption of AI policy and whether traditional political fault lines have manifested themselves in the AI issue area. Here, we gather data on the state-level adoption of AI policy, as well as roll call voting on AI bills (classified on the basis of consumer protection versus economic development), by state legislatures and analyze the political economy of AI legislation. We find that rising unemployment and inflation are negatively associated with a state's AI policymaking. With respect to individual legislator support, we find that liberal lawmakers and Democrats are more likely to support bills establishing consumer protection requirements on AI usage. The results suggest that economic concerns loom large with AI and that traditional political fault lines may be establishing themselves in this area. [ABSTRACT FROM AUTHOR]

In the benchmark New Keynesian (NK) model, I introduce the real cost channel to study government spending multipliers and provide simple Markov chain closed-form solutions. This model departs fundamentally from most previous interpretations of the nominal cost channel by flattening the NK Phillips Curve in liquidity traps. At the zero lower bound, I show analytically that following positive government spending shocks, the real cost channel can make inflation rise less than in a model without this channel. This then causes a smaller drop in real interest rates, resulting in a lower output gap multiplier. Finally, I confirm the robustness of the real cost channel's effect on multipliers using extensions of two models. [ABSTRACT FROM AUTHOR]

Inequality among people has several unwanted effects, in humanistic, social and economic contexts. Several studies address distributional preferences among groups, but little is known about when inequality issues are focused and when and why inequality abatement measures are brought on the political agenda. We show that during the period 2004 to 2023, inequality issues were focused during elections to the EU and UK parliament and with greatest strength during the elections to the EU parliament in May 2004 and to the UK parliament in May 2015. Periods with high unemployment and inflation cause the discussion on inequality to be followed by discussions on inequality measures. However, when the discussion of inequality is followed very closely by the discussions of abatement measures, inequality aversion becomes more strongly associated with the macroeconomic variables inflation and GDP (recessions) than with unemployment and more strongly associated with the concerns for fairness than concerns with war and crime. The results were obtained examining Google Trends and scholarly studies. [ABSTRACT FROM AUTHOR]

This article provides panel data estimations of the tax revenue determinants in VG (Visegrad Group) countries (the Czech Republic, Hungary, Poland, and Slovakia) for the period 1994–2023. The aim of this research was to determine how the macroeconomic determinants affect the tax revenues in the selected countries. Within the static models, the Hausman test showed that the FE (fixed effects) model is appropriate and reflects the significant effects of the gross domestic product, population, inflation, unemployment, import, government revenue, government expenditure, and EU enlargement on the tax revenue. The PMG (Pooled Mean Group) model is an adequate model among the dynamic models and manifests the significant effect of the lagged value of the tax revenue. In the short term, growth of the gross domestic product and population by 1% causes higher changes in the tax revenue of 0.14% and 2.93%. Likewise, growth of the inflation rate by 1% decreases the tax revenue by 0.037%, which is higher than in the long term. Further, the results show that EU enlargement is significant for tax revenue in the short term, as well as in the long term. In the long term, unemployment has a greater significant effect on tax revenue, where 1% growth decreases the tax revenue by 0.15%. In contrast, government revenue is significant for tax revenue only in the long term, where 1% growth increases the tax revenue by 0.77%. [ABSTRACT FROM AUTHOR]

The paper analyzes the interaction of economic growth and inflation rate on accounting for both sources of capital investment and global shocks. The analysis method is a time-varying coefficient Bayesian vector autoregression (TVC-BSVAR) model applied in a quarterly data sample of the Vietnam economy over Q2/2001–Q4/2022. The global factors, including the world economic growth and the inflation rate, are the most important drivers of domestic growth and inflation rate. A greater world growth rate raises the domestic growth rate while a higher world inflation rate increases the domestic inflation rate. If the world economy falls into stagflation with declining growth and a rising inflation rate, Vietnam's economic growth reduces while the inflation surges. The monetary and fiscal policy can be employed to recover domestic economic growth but with an associated surge in the domestic inflation rate. [ABSTRACT FROM AUTHOR]