TY  - RPRT
        AU  - Karanassou, Marika
AU  - Sala, Hector
AU  - Snower, Dennis J.
        TI  - The European Phillips Curve: Does the NAIRU Exist?
        PY  - 2003/Sep/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 876
        UR  - https://www.iza.org/publications/dp876
        AB  - This paper has two aims. First, it provides simple theoretical models that highlight two
channels whereby monetary shocks have permanent real effects and the interactions
between these channels. Second, it presents an empirical dynamic model, covering a panel
of EU countries, and derives the implied long-run inflation-unemployment tradeoff. Our
results suggest that the tradeoff is far from vertical. We also find that wage persistence plays
a larger role than price persistence in generating the tradeoff, but that the two forms of
persistence are complementary in giving monetary policy its long-run real effects. Our results
call for a reassessment of the European macroeconomic experience.
        KW  - inflation
KW  - Phillips curve
KW  - nominal inertia
KW  - monetary policy
KW  - business cycles
KW  - forward-looking expectations
KW  - unemployment
KW  - homogeneous dynamic panels
KW  - panel unit root tests
        ER  -