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Frontiers of Economics in China

Front. Econ. China    2015, Vol. 10 Issue (2) : 335-364     DOI: 10.3868/s060-004-015-0014-9
research-article |
Is the Phillips Curve Valid in China?
Yang Ji1(),Ran Li2(),Jingxian Zou3()
1. National School of Development, Peking University, Beijing 100871, China
2. National School of Development, Peking University, Beijing 100871, China
3. National School of Development, Peking University, Beijing 100871, China
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Abstract

Is the “non-existence” of the Phillips curve in China a truth or just an illusion due to the deficiency of data? Should policy analysis follow the light of New-Keynesian or New-classical economics? These questions require empirical work on the Phillips curve, which has long been limited in China due to an inaccurate unemployment rate and unreliable estimated output gap. Instead of the insignificant or self-contradicting results in previous work, this paper puts forward a significant estimation, creatively using the vacancy-jobseeker ratio instead of the unemployment rate. It is suggested that a robust Phillips curve cannot be ignored and New-Keynesian economics should be employed in policy analysis in the short run.

Keywords Phillips curve      expected inflation      unemployment rate      China     
Issue Date: 19 June 2015
 Cite this article:   
Yang Ji,Ran Li,Jingxian Zou. Is the Phillips Curve Valid in China?[J]. Front. Econ. China, 2015, 10(2): 335-364.
 URL:  
http://journal.hep.com.cn/fec/EN/10.3868/s060-004-015-0014-9
http://journal.hep.com.cn/fec/EN/Y2015/V10/I2/335
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