ANALYSIS OF SUBSTITUTION CHANGES IN THE PHILLIPS CURVE IN V4 COUNTRIES OVER THE COURSE OF ECONOMIC CYCLES

Bozena Kaderabkova; Emilie Jasova; Robert Holman

doi:10.20472/ES.2020.9.2.003

Authors

Bozena Kaderabkova University of Economics in Prague, Fakulty of Economics, Czech Republic Author
Emilie Jasova University of Economics in Prague, Fakulty of Economics, Czech Republic Author
Robert Holman Economic University in Prague, Czech Republic Author

DOI:

https://doi.org/10.20472/ES.2020.9.2.003

Keywords:

Phillips curve, Unemployment rate by gender, Age and education, Phase of the economic cycle, Countries of V4

Abstract

The aim of the article is to determine the nature and intensity of the slope of the Phillips curves (PCs) for workers vulnerable to unemployment across different phases of the economic cycle between 2000 and 2016 in the Visegrad Group (V4). Linear regression models are used, with a household deflator of unemployment as a proxy variable. To avoid a reduction in the number of observations and the associated loss of estimation validity typical of break models, the one-year model with a categorical variable representing the phase of the economic cycle is modified. The obtained results are compared with findings from international literature. Throughout the observed period, a statistically significant negative slope of the Phillips curve is found in all V4 countries, with the highest intensity in the Czech Republic and the lowest in Hungary. Extrapolation of current trends in the phases of the economic cycle indicates a strengthening of the statistically confirmed negative slope of the Phillips curve in the Czech Republic, its re-emergence in Slovakia, its appearance in Hungary, and a return to a positive slope in Poland.

Data:
Received: 4 Sep 2020
Revised: 26 Oct 2020
Accepted: 6 Dec 2020
Published: 20 Dec 2020