# RDP 2021-09: Is the Phillips Curve Still a Curve? Evidence from the Regions Appendix A: RBA Aggregate Wage Phillips Curve Specification, Coefficients and Implied Slope

The current RBA wage Phillips curve forecasting model is specified as[46]:

$%ΔWP I t =α+β%ΔWP I t−1 +γ( u t−1 − u t−1 * u t−1 )+τΔ u t−1 +φ % Δ ye DFDde f t 4 +θ Tren d t−1 4 + ∈ t$

where:

$\text{%Δ}WP{I}_{t}$ Quarterly growth in the wage price index (WPI) (hourly rates excluding bonuses); seasonally adjusted. Quarter-average unemployment rate; seasonally adjusted. Non-accelerating inflation rate of unemployment (NAIRU; described in Cusbert (2017)); two-sided smoothed quarterly estimate. Quarterly change in the unemployment rate; seasonally adjusted. Year-ended growth in the domestic final demand implicit price deflator. Trend inflation expectations estimated using a Kalman filter (described in Cusbert 2017); two-sided smoothed quarterly estimate.
Table A1: RBA Wage Phillips Curve Model – Estimated Coefficients
Estimated on March 1998 – December 2019
Dependent variable = WPI excluding bonuses
Constant −0.240
(0.243)
$\text{%Δ}WP{I}_{t-1}$ 0.354***
(0.103)
$\left(\frac{{u}_{t-1}-{u}_{t-1}^{*}}{{u}_{t-1}}\right)$ −0.476***
(0.122)(a)
$\text{Δ}{u}_{t-1}$ −0.151**
(0.061)
$\frac{{\text{%Δ}}^{ye}DFDde{f}_{t}}{4}$ 0.097
(0.074)
$\frac{Tren{d}_{t-1}}{4}$ 1.070***
(0.404)(a)