Faculty Sponsor(s)
Eric Schuck
Subject Area
Economics
Description
This project estimates the Phillips curve using disaggregated US data. The panel model for this project was created using relative unemployment rates and metropolitan regional price parities for all items (RPP) for each state from 2008-2018. The relative unemployment rate was created for each state by taking the state level of unemployment and dividing it by the US national unemployment rate. The metropolitan price parity was created by taking the Consumer Price Index (CPI) for all metropolitan areas in a state and a dividing it by the US national CPI for all metropolitan areas in the US. The dependent variable is metropolitan RPP, and the independent variables are the relative unemployment rate, a lagged unemployment rate, and a lagged metropolitan RPP. During the time-period of 2008-2018, the results suggest there is an inverse relationship to the disaggregated Philips Curve. However, the aggregated Philips Curve is flat over this same time period. I discuss why a disaggregated approach allows for identification of the Phillips curve that is not found using aggregate data.
Recommended Citation
Wagner, Deric, "Disaggregated Phillips Curve Regression" (2021). Linfield University Student Symposium: A Celebration of Scholarship and Creative Achievement. Event. Submission 12.
https://digitalcommons.linfield.edu/symposium/2021/all/12
Disaggregated Phillips Curve Regression
This project estimates the Phillips curve using disaggregated US data. The panel model for this project was created using relative unemployment rates and metropolitan regional price parities for all items (RPP) for each state from 2008-2018. The relative unemployment rate was created for each state by taking the state level of unemployment and dividing it by the US national unemployment rate. The metropolitan price parity was created by taking the Consumer Price Index (CPI) for all metropolitan areas in a state and a dividing it by the US national CPI for all metropolitan areas in the US. The dependent variable is metropolitan RPP, and the independent variables are the relative unemployment rate, a lagged unemployment rate, and a lagged metropolitan RPP. During the time-period of 2008-2018, the results suggest there is an inverse relationship to the disaggregated Philips Curve. However, the aggregated Philips Curve is flat over this same time period. I discuss why a disaggregated approach allows for identification of the Phillips curve that is not found using aggregate data.
