Resumen de The New Keynesian Phillips Curve in a Small Open Economy: Empirical Evidence from Australia.

Syed Kanwar Abbas, Prasad Sankar Bhattacharya, Debdulal Mallick, Pasquale M. Sgro

• This study estimates the new Keynesian Phillips curve ( NKPC) of Gali and Monacelli for a small open economy using Australian data. Our detailed investigation hinges on estimating the structural parameters in five different variants of the Gali-Monacelli NKPC, which relates the inflation process to terms of trade and the real exchange rate; the marginal cost and output gap as proxies for real economic activity and the hybrid version incorporating both forward- and backward-looking inflation expectations. The analysis and extensive robustness checks overwhelmingly establish that the Gali-Monacelli NKPC cannot explain the dynamics of inflation and is rejected by the Australian data.