Some international evidence on the Lucas Supply Function

We provide empirical evidence on the Lucas Supply Function based on actual inflation surprises for 19 industrial economies. Our results show that the inflation surprise positively correlates with the output gap and that this relationship is negatively related to inflation variability. ► We provide e...

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Bibliographic Details
Published in:Economics letters 2012-02, Vol.114 (2), p.157-160
Main Authors: Fendel, Ralf, Rülke, Jan-Christoph
Format: Article
Language:English
Subjects:
Business cycle
Business cycles
Correlation analysis
Economic models
Imperfect information
Industrial economics
Inflation
Inflation expectations
Lucas Supply Function
Manycountries
Studies
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Summary:We provide empirical evidence on the Lucas Supply Function based on actual inflation surprises for 19 industrial economies. Our results show that the inflation surprise positively correlates with the output gap and that this relationship is negatively related to inflation variability. ► We provide evidence on the Lucas Supply Function based on actual inflation surprises. ► Results show that inflation surprises are positively correlated with the output gap. ► This relationship is negatively related to inflation variability.
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2011.10.003