Application of the New Keynesian Phillips Curve Inflation Model in Sri Lanka
Hayashi, Tadateru; Wickremasinghe, Nimali Hasitha; Jayakody, Savindi | August 2015
Abstract
This working paper applied the New Keynesian Phillips Curve (NKPC) framework to nonfood inflation in
Sri Lanka during January 2006-April 2015. It differs from other papers on NKPC in three ways: (i) inflation
defined as a month-on-month increase in the price index to avoid base effect; (ii) monthly output gap is
estimated from power generation data to ensure sufficient number of data for regressions; and (iii) nominal
effective exchange rate, global commodity prices, and domestic fuel prices are included into explanatory
variables to capture supply-side impact on prices. With all these features, the paper confirmed that the
forward-looking NKPC model is applicable to Sri Lanka.
Citation
Hayashi, Tadateru; Wickremasinghe, Nimali Hasitha; Jayakody, Savindi. 2015. Application of the New Keynesian Phillips Curve Inflation Model in Sri Lanka. © Asian Development Bank. http://hdl.handle.net/11540/5116. License: CC BY 3.0 IGO.ISSN
2313-5867 (Print), 2313-5875 (e-ISSN)
Keywords
Development Planning
Development Research
Technology Development
Aid And Development
Comprehensive Development Framework
Development Cooperation
Development Management
Development Strategies
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http://hdl.handle.net/11540/5116Metadata
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