Page 12 - AEI Insights 2020 - Vol. 6, Issue 1

AEI Insights, Vol 6, Issue 1, 2020

that the slope coefficients in the NKPC are positive in only four countries, namely Indonesia,
Lao, the Philippines and Thailand, in line with the theoretical positive association between
inflation rate in the next period and unemployment rate.

Countries Slope parameter (κ) Slope parameter (κ)
in PC in NKPC
Brunei -0.301 -0.404

Indonesia -0.077 0.232

Cambodia -1.960 -1.592
Lao 2.521 1.103

Malaysia -0.895 -0.963
Myanmar -7.172 -10.683

Philippines -0.568 2.875**
Singapore 0.332 -0.605

Thailand -0.574 0.163
Vietnam -2.986 -4.191*

Table 4: Phillips curve (PC) and New Keynesian Phillips curve (NKPC) in ASEAN
Notes: * indicates five percent significance level and ** indicates one percent significance level

Figure 3 depicts the time varying slope parameter in Phillips curve (PC) and New Keynesian
Phillips curve (NKPC) in ASEAN-5 countries, namely Indonesia, Malaysia, the Philippines,
Singapore and Thailand. The time-varying analysis of the PC revealed that there is a flattening
of the Phillips curve in the Philippines and Thailand. In the case of the Philippines, the slope
parameter of the PC increased from -4.450 in 2013 to -3.847 in 2014, and further to -0.832 in
2017. Similarly, in the case of Thailand, the slope parameter of the PC increased from -1.414
in 2013 to -1.001 in 2015, and further to -0.201 in 2017. There is no flattening of the Phillips
curve in Indonesia, Malaysia and Singapore. It should be noted that there is no flattening of the
New Keynesian Phillips curve in all five ASEAN countries.

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