Working Paper
Increasing Returns to Scale and the Long-Run Phillips Curve
A growing body of empirical evidence shows that there exists a long-run positive tradeoff between inflation and real macroeconomic activity. Within a New Keynesian framewok, we examine how increasing returns generate a positive long-run relation between inflation and output.
Key Words
- Increasing returns
- Inflation
- monetary policy
- Nominal inertia
- Phillips curve
- Phillips-Kurve