Using the natural rate of unemployment to predict changes in inflation Suppose that the equation of the

Question:

Using the natural rate of unemployment to predict changes in inflation Suppose that the equation of the Phillips curve is

\[
\pi_{t}-\pi_{t}-1=4.0-0.32 \theta t
\]

Fill in the table below using the data collected in Question 7.

You will need to use a spreadsheet.

a. Is the Phillips curve able to properly predict changes in the price level over the whole time period?

b. Was the Phillips curve able to predict changes in the price level during the global financial crisis years that lasted from 2007 till 2009? Explain your answer.

c. Assess the ability of the expectations augmented Phillips curve to predict inflation during each of the global financial crisis of 2007-2009 as well as the European sovereign crisis of 2010-2015.

image text in transcribed

Data from question 7 Estimating the natural rate of unemployment To answer this question, you will need data on the annual French unemployment and inflation rates since 2000. Go to the English language Web site of the National Institute of Statistics and Economic Studies of France (http://www.insee.fr/en/ default.asp) to retrieve and download the annual data for the unemployment rate and inflation rate for France under the title "statistical indices and series." Select the data for the consumer price index as a measure of the retail price levels.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Macroeconomics

ISBN: 9781292160504

7th Global Edition

Authors: Olivier J. Blanchard

Question Posted: