The New Keynesian Phillips Curve in Thailand Through Two Financial Crises

Abstract

This paper examines the New Keynesian Phillips curve (NKPC) in Thailand in the two decades from 1993 to 2014 marked by the two large crises of 1997 and 2008. This analysis is significant because expectations and economic growth in Thailand may have been influenced by incidents including coups and natural disasters. The findings are summarized as follows. First, the empirical analysis shows that the NKPC in Thailand is relatively forward-looking compared with that shown in previous studies involving developed countries. Second, the NKPC in Thailand did not exist before the 1997 crisis, probably because of the bubble economy. Third, the NKPC is clearly observable after 2009, partly because of improved economic conditions.