Abstract
The New Keynesian Phillips Curve (NKPC) became a staple in the New Keynesian economics, assuming an existence of a short-term trade-off between inflation and real economic activity, either in a form of labor unit costs or output gap. Extending the cost-based NKPC with hybrid, backward-looking price setting to the Czech Republic, we aim to examine the impact of unit labor costs, inflation expectations, import prices and real effective exchange rate on the development of inflation between 2000M1 and 2020M12. Dealing with nonstationary and cointegrated time series, we compare results employing an Error Correction Model (ECM) and an Autoregressive Distributed Lag (ARDL) model with the variables integrated in order I(1). Our data result suggest that the labor unit costs, and the inflation expectations might have an impact on the evolution of inflation based on the ECM and ARDL in differences for the Czech Republic between 2000M1 and 2020M12, although the results are too uncertain to be unambiguous.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
