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Indiana University Bloomington

BEPP

The Kelley Advantage

The department is home to the authors of Managerial Economics and Business Strategy and Games and Information: An Introduction to Game Theory, two of the nation’s leading textbooks in the field.

Research and Publications

Journal Articles

The Phillips Curve and the Italian Lira, 1861-1998

2010, North American Journal of Economics and Finance

Michele U. Fratianni, Alessandra Del Boca, Francesco Spinelli, Carmine TreCroci

Abstract

We examine Italian inflation rates and the Phillips curve with a very long-run perspective, one that covers the entire existence of the Italian lira from political unification (1861) to the entry of Italy in the European Monetary Union (end of 1998). We first study the volatility, persistence and stationarity of the Italian inflation rate over the long run and across various exchange-rate regimes that have shaped Italian monetary history.  Next, we estimate alternative Phillips equations and investigate the extent to which nonlinearities, asymmetries and structural changes characterize the inflation-output trade-off in the long run. We capture the effects of structural changes and asymmetries on the estimated parameters of the inflation-output trade-off relying partly on sub-sample estimates and partly on time-varying parameters estimated with the Kalman filter. Finally, we investigate causal relationships between inflation rates and output and extend the analysis to include the US and the UK for comparison purposes. The inference is that Italy has experienced a conventional inflation-output trade-off only during times of low inflation and stable aggregate supply.

Citation

Alessandra Del Boca,  Michele Fratianni, Franco Spinelli, and Carmine Trecroci, "The Phillips Curve and the Italian Lira, 1861-1998", North American Journal of Economics and Finance, 2010, 21(2): 182-197.

Keywords

Inflation, Phillips curve, Italian lira.