Research On Dual Stickness Phillips Curve In China

The Phillips curve can depict inflation dynamics and forecast the level of inflation, On the other hand, it plays an important role in modern monetary transmission mechanism. The appropriate form of Phillips curve model can not only help to control inflation, but also provide references to make reasonable, effective monetary policy for the central bank. The dual stickiness Phillips curve Integrating sticky Prices and sticky Information with strong micro foundation, and proceed from structural equation, endogenous generate inflation inertia and inflation expectations, make up for the deficiency of the new Keynes Philips curve to explain inflation inertia terms.In this paper, we use the quarterly macroeconomic data of the first quarter of 1992 to the fourth quarter of 2013 to estimate China double sticky Phillips curve, the VAR model can overcome the GMM estimation in small sample problem, so this paper uses the VAR model to estimate the expected inflation series and the practical unit labor cost sequence, then minimize the variance between theory model of the inflation rate and the actual inflation inflation series to estimate the model parameters. The output gap or unit labor cost is an effective alternative for the actual cost of labor has been another focus of domestic and foreign scholars, we also uses the output gap and unit labor costs to estimate China’s dual sticky Phillips curve.The empirical results show that the sticky price and sticky information also exists in the economy of our country, unit labor cost and the output gap are effectively replace the variables of actual labor costs. In the dual Phillips curve based on unit labor cost, the degree of price stickiness is 57.3%, namely about 57.3% of the enterprises will not adjust the price level each quarter, the average time for enterprises to determin the price level for the 2.34 quarter. The degree of information stickiness is 40.6%,, about 40.6% of the enterprises will not be updated information each quarter, the average time of our country enterprise information is updated for the 1.68 quarter, namely enterprise average will update information every 5 months. The degree of price stickiness than information stickiness degree.Based on the dual sticky Phillips, we use IS curve and the objective functions of central bank to establish the analysis frame of general equilibrium of new Keynes monetary policy dynamics, obtaining the optimal monetary policy is the future research direction of this paper.