Norges Bank

Working Paper

How New Keynesian is the US Phillips curve?

By Ragna Alstadheim
Working Paper


I provide a generalization of Calvo price setting, to include non-overlapping contracts as a special case and embed this in a small DSGE model. The resulting Generalized Phillips Curve (GPC) nests New-Keynesian and Neoclassical versions. I linearize the model around a potentially non-zero trend inflation rate, and estimate it on US data using Bayesian methods, allowing for Markov switching in the variances of structural shocks. I find that the Phillips curve is 100% New Keynesian. There is no evidence of either forward or backward indexation. I illustrate that trend inflation affects the estimation of the Phillips curve.

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ISSN 1502-8143 (online)

Published 4 December 2013 10:00
Published 4 December 2013 10:00