What the study found
The study found that the comprehensive Post Keynesian model of inflation was not robust for U.S. data from 2002 to 2024. The revised model later matched the original sign pattern for unit labor costs, but that coefficient was not statistically significant.
Why the authors say this matters
The authors suggest the analysis helps assess whether a Post Keynesian explanation of inflation remains relevant for the United States, including the period after COVID-19 began. They also discuss possible reasons for the reduced size and significance of the model's coefficients and for the pass-through of wage growth to broader inflation measures.
What the researchers tested
The researcher used quarterly U.S. data from 2002 to 2024 and estimated a reduced-form inflation equation from a Post Keynesian perspective. The model combined an aggregate demand-augmented wage-cost markup equation with a wage growth equation, and its robustness was tested using different measures of labor market slack, wages, and inflation.
What worked and what didn't
The comprehensive model did not remain robust when alternative measures of wages, unemployment, and inflation were used. The negative relationship between unit labor costs and inflation in the updated model was not robust once control variables for energy costs and imports were added; after Prais-Winsten estimation to address serial correlation, the unit labor costs coefficient became positive but was not statistically significant.
What to keep in mind
The abstract does not describe details beyond the U.S. quarterly period studied or provide full information on the model specifications used in every test. It also does not report statistical details beyond the summary that the unit labor costs coefficient was not significant after the revised estimation.
Key points
- The comprehensive Post Keynesian inflation model was not robust for U.S. data from 2002 to 2024.
- Alternative measures of wages, unemployment, and inflation did not restore the model's robustness.
- Adding controls for energy costs and imports made the unit labor costs–inflation relationship non-robust.
- After Prais-Winsten estimation, the unit labor costs coefficient turned positive but was not statistically significant.
- The author discusses possible reasons for weaker coefficients and wage-growth pass-through in the later period.
Disclosure
- Research title:
- Post Keynesian inflation model was not robust for U.S. data
- Authors:
- Christopher R. Herdelin
- Institutions:
- Saint Peter's University
- Publication date:
- 2026-03-09
- DOI:
- 10.3390/jrfm19030202
- OpenAlex record:
- View
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