Abstract
We estimate the New Keynesian Phillips Curve for the USA from 1997 to 2017 using expected inflation from financial instruments. We use a spliced series with two sources: TIPS spread and inflation swaps. Our empirical tests find higher coefficients on backward-looking inflation than forward-looking inflation. This supports the hybrid version of the NKPC. We find positive, significant coefficients on the marginal cost proxy using ordinary least squares estimation but zero coefficients using GMM estimation. This gives mixed results for the role of real economic variables in the determination of inflation.
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