Great recession and the informational shifts: new evidence from sticky information Phillips curve. Issue 1 (2nd January 2020)

• Record Type: Journal Article
• Authors: Kumar, Saten
• Is Part Of: Applied economics letters. Volume 27:Issue 1(2020)
• Page Start: 1
• Page End: 4
• Publication Date: 2020-01-02
• Subjects: Financial crisis -- sticky information Phillips curve -- stickiness parameter; C5 -- E2; Economics -- Periodicals; Economics, Mathematical -- Periodicals; 330
• DOI: 10.1080/13504851.2019.1602704
• Languages: English
• ISSNs: 1350-4851

Abstract

ABSTRACT: We utilize the nonlinear least squares (NLLS) and seemingly unrelated regression (SUR) techniques to estimate information stickiness parameter λ for the USA. We find that λ values appeared in a somewhat humped shape or inverted U pattern during the financial crisis. Prior to the financial crisis (1978.Q1-2006.Q4), λ was around 0.3. However, when the sample is extended to include the financial crisis period (1978.Q1-2011.Q4), λ increased to around 0.6. Results imply that during the financial crisis many firms became flexible and efficient and used updated information to set optimal prices.