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"Estimated Inflation Costs Had European Unemployment Been Reduced in the 1980s by Macro Policies," Journal of Macroeconomics, 1999.

Paper: pdf file

This paper uses a multicountry econometric model to estimate what the inflation costs would have been had German monetary policy reduced European unemployment in the 1982:1-1990:4 period. A "non-NAIRU" framework is proposed for thinking about these costs.


The results in this paper suggest that the German monetary authorities may have followed too restrictive a monetary policy in the 1980s.

This paper refers to further results in 1997#2 regarding the estimation and testing of the price and wage equations in the MC1 model.

The results in this paper can be duplicated on this site. Chapter 2 of The MC1 Model Workbook explains how to do this--Chapter 2, MC1 Workbook.