IS THE PHILLIPS-CURVE REALLY A CURVE - SOME EVIDENCE FOR CANADA, THE UNITED-KINGDOM, AND THE UNITED-STATES

Previous tests for convexity in the Phillips curve have been biased be cause researchers have employed filtering techniques for the nonaccele rating inflation rate of unemployment (NAIRU) that have been fundament ally inconsistent with the existence of convexity. This paper places l inear and nonlinear models of the Phillips curve on nit equal statisti cal footing by estimating model-consistent measures of the NAIRU. Afte r imposing plausible restrictions on the variability in the NAIRU, we find that the nonlinear model fits the data, best. The implications fo r the macroeconomic policy debate are that policymakers who are unsucc essful in stabilizing the business cycle will induce a higher natural rate of unemployment.