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In the Business Review: Output Gaps, Urban Productivity, the New Keynesian Phillips Curve

March 9, 2011

For immediate release
Contact: Katherine Dibling, Senior Media Representative, (215) 574-4119

Released today, the First Quarter 2011 Business Review includes these articles: "Output Gaps: Uses and Limitations," by Roc Armeneter; "Urban Productivity Advantages from Job Search and Matching," by Jeffrey Lin; and "Inflation Dynamics and the New Keynesian Phillips Curve," by Keith Sill. Also, the latest issue of Research Rap. (214 KB, 3 pages)

Output Gaps: Uses and Limitations (312 KB, 8 pages)

• The author defines the concepts of output and employment gaps and discusses why they are useful to economists, other researchers, and market participants.
• He also points out some of the limitations of output gap estimates for inflation forecasting and output stabilization.
• The article includes a sidebar on "Did Oil Prices Cause the Inflation of the 1970s?"
• Author: Roc Armenter

Urban Productivity Advantages from Job Search and Matching (330 KB, 8 pages)

• Why do densely populated areas tend to be more productive? One explanation is that the concentration of workers, businesses, and households generates productivity advantages in the form of agglomeration economies.
• The author describes the evidence for agglomeration economies from job search and matching.
• The article includes a table on "Occupation Switching in Third District Metropolitan Areas, 2005-2009."
• Author: Jeffrey Lin

Inflation Dynamics and the New Keynesian Phillips Curve (340 KB, 9 pages)

• The author discusses one prominent theory of how inflation is determined, as articulated by the New Keynesian Phillips curve.
• He also outlines some implications of the theory for inflation and economic activity and for monetary policy.
• The article includes a graph illustrating the relationship between inflation and unemployment from 1960-2008
• Author: Keith Sill

The Business Review, which is published quarterly, presents articles written by our staff economists that are aimed at readers with a general interest in economics. Topics covered include economic policy, banking, and financial and regional economics. It includes less technical articles written by economists in the Bank's Research Department. They are intended for a wide audience and often address timely economic issues.

The Federal Reserve Bank of Philadelphia helps formulate and implement monetary policy, supervises banks and bank holding companies, and provides financial services to depository institutions and the federal government. It is one of the 12 regional Reserve Banks that, together with the Board of Governors in Washington, D.C., make up the Federal Reserve System. The Philadelphia Federal Reserve Bank serves eastern Pennsylvania, southern New Jersey, and Delaware.