Asymmetric Price Adjustment And China's Phillips Curve

Initially, Phillips curve has been put forward by economist Phillips. He, in accordance with the data of England from 1861 to 1957, estimated the relationship between unemployment and the change of nominal wage. Through the revision of Samulson and Solow, Phillips curve began to express the relationship among the economic growth, unemployment and inflation. Since the economic growth, low unemployment and the stability of price level are the main three objectives of modern macroeconomic management, the relationship among them influence directly whether or not those objectives can be achieved and the selection of macroeconomic policies. In sight of these, Phillips curve called much attention of economists.As for the form of Phillips curves, it is an issue that has long been argued among economists. Phillips(1958) regarded it as a curve, not a line. While later researches concerning Phillips curve are done under the linear assumption. For example, Robert Gorton (1970,1975,1978) estimated the American Phillips curves under this assumption. Due to the uncertainty of the estimates of Phillips curves, the issue whether or not Phillips curves can provide guidance for macroeconomic policy makers is now being argued. Gradually some economists began to research the non-linearity of Phillips curves. They began to investigate the empirical evidence of non-linearity and its policy implications. Laxton, Meredith and Rose (1994), Turner(1995), Clark, Laxton and Rose(1996), Debelle and Laxton (1997) researched the one form of Phillips curves'non-linearity–convexity. Basing on the above all researches, this paper discusses another form of non-linearity---the asymmetric price adjustment and the asymmetric Phillips curves. It is not the...