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
Development models
Economic development
Rural planning
Strategic planning
Government programs
Public finance
Development
Economics
Development Research
Economic development projects
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Citable URI
http://hdl.handle.net/11540/5116Metadata
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