DP11714 The Output-Inflation Trade-Off in Switzerland, 1916 -2015

Author(s): Stefan Gerlach
Publication Date: December 2016
Keyword(s): output-inflation trade off; Phillips curve; structural break; Switzerland
JEL(s): E5, F31, N1
Programme Areas: Monetary Economics and Fluctuations
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=11714

This paper follows Baltensperger and Jordan (1998) and studies the output-inflation trade-off in Switzerland, over the period 1915-2015. We estimate a standard Phillips curve model and provide estimates using a moving window. These show that the parameter on lagged inflation has risen gradually over time and that on import prices has declined. The impact of the output gap rose over time until the 1990s, when it lost all importance. Finally, we test for shifts of the parameters at unknown points in time. We identify four separate sample periods: 1916-1936; 1937-1971; 1971-1993 and 1994-2015.