Nationaløkonomisk tidsskrift,
Nationaløkonomisk Forening

Abstract: It is usually the case that even analyses of small open economies invoke a vertical long-run Phillips curve (or a long-run supply curve). However, the very logic that is typically adduced in favour of a vertical long-run Phillips curve in a closed economy can in fact easily entail a horizontal long-run Phillips curve in a small open economy with imports of raw materials and/or final goods: in such a case, a modern error correction specification of the wage dynamics can easily suggest that the rate of inflation will eventually stabilise, at any arbitrarily fixed rate of unemployment, and at a level given by the exchange rate adjusted foreign inflation rate.

Keywords: Phillips-kurven; inflation

JEL-codes: A10

Language: Danish

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