Phillips curve in Canada: a tale of wage bargaining and tariff rate

Authors

  • Adviti Devaguptapu SRM University AP, Mangalagiri, India
  • Pradyumna Dash Indian Institute of Management Raipur

Keywords:

Phillips curve, Time-varying parameter vector autoregressive model (TVP-VAR), price-setting behavior, wage-setting behavior

Abstract

In this paper, we re-examine the Phillips curve for Canada over the period of 1971(Q1)–2018(Q4) and find that the impulse response of inflation to the unemployment gap has reduced over time. On further examination, we find that changes in both tariff rate and collective wage bargaining power have led to the reduced sensitivity of inflation to the unemployment gap. On comparison, the role of change in the collective bargaining has greater influence on the reduction in the sensitivity than that of change in the tariff rate.

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Published

2023-12-27

Issue

Vol. 15 No. 3-4 (2023)

Section

Articles

License

Copyright (c) 2023 adviti devaguptapu, Pradyumna Dash

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