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- Title
The NIRCU and the Phillips curve: an approach based on micro data.
- Authors
Köberl, Eva M.; Lein, Sarah M.
- Abstract
In this paper we propose a straightforward method to derive a non-inflationary rate of capacity utilization (NIRCU) based on micro data. We condition the current capacity utilization of firms on their current and planned price adjustments. The non-inflationary capacity utilization rate is then defined as the rate where a firm feels no price adjustment pressure. One of the main advantages is that this methodology uses structural aspects and does not make it necessary to operate with - often rather arbitrary - statistical filters. We show that our aggregate NIRCU performs remarkably well as an indicator of inflationary pressure in a Phillips curve estimation.
- Subjects
INDUSTRIAL capacity; PRICE inflation; BUSINESS enterprises; PHILLIPS curve; PRICES; BUSINESS planning; FILTERS (Mathematics)
- Publication
Canadian Journal of Economics, 2011, Vol 44, Issue 2, p673
- ISSN
0008-4085
- Publication type
Article
- DOI
10.1111/j.1540-5982.2011.01649.x