In the aftermath of the global financial crisis of 2008, compounded by the COVID-19 pandemic and, most notably, the escalation of the Russia-Ukraine conflict, inflation has returned to the Euro Area 20. The primary objective of this dissertation is to understand the dynamics of inflation and output associated. To achieve this goal, after filtering the data using the Hodrick-Prescott filter and employing the Two-Stage Least Squares method, a Hybrid New Keynesian Phillips Curve was estimated for the period of 2015-2023. The results indicate that observed inflation is significantly influenced by both retrospective elements – past inflation – and prospective elements – the current expectations of economic agents regarding future inflation. Interestingly, the effect of the output gap on observed inflation is not significant. Furthermore, the findings reveal that current expectations about future inflation carry more weight than past inflation. Additionally, the Russia-Ukraine conflict, the monetary policy measures adopted by the European Central Bank, and speculative activities by investment funds have all had a significant impact on these expectations.
Date of Award | 12 Jul 2024 |
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Original language | English |
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Awarding Institution | - Universidade Católica Portuguesa
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Supervisor | Leonardo Costa (Supervisor) |
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- Inflation
- Euro area 20
- Hybrid new Keynesian Phillips curve
- Covid-19
- Russia-Ukraine war
- Mestrado em Economia Empresarial
The dynamics of inflation and output in the euro area 20: a hybrid new Keynesian Phillips curve approach
Pinho, I. M. M. D. (Student). 12 Jul 2024
Student thesis: Master's Thesis