Is the Phillips curve stable? A time-varying parameter approach

We derive two empirical Phillips curve models based on Robert Gordon's reduced-form specification of conventional wage and price equations of a more complete structural model of the U.S. economy. One is a stochastic-coefficients model and the other is a conventional fixed-coefficients model. We used a stochastic-coefficients empirical model to investigate the volatility of the Phillips curve relationship hypothesized by many economists during...