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This study reinvestigates the validity of the Phillips curve in Nigeria for the period 1980–2020 by considering the asymmetric nexus between unemployment and inflation.

The nonlinear autoregressive distributed lag (NARDL) technique was used to decompose the unemployment variable into two components: tight and loosened labour markets.

The empirical outcome shows that unemployment has a significant negative effect on inflation when the labour market is tight and a weakly negative and significant effect on inflation when the labour market is loose. The study confirms an asymmetric Phillips curve in Nigeria since the positive (tight) unemployment rate exerts a greater effect on inflation than the negative (loosened) unemployment rate.

The findings of this study have important implications for implementing monetary policy in Nigeria.

To the best of the authors’ knowledge, this is the first study to investigate the existence of a nonlinear Phillip curve in Nigeria.

In 1979, Galbraith wrote a manuscript titled “The Social Consequences of Inflation and Unemployment and Their Remedies.” The manuscript was found in the John Kenneth Galbraith Personal Papers at the John F. Kennedy Library. The reasons for Galbraith to write the article might appear at first glance to be purely contextual. At the macroeconomic level, the United States was experiencing stagflation, a situation unseen since 1945, resulting in double-digit inflation rates and high unemployment. A policy debate was going on about the Phillips curve and whether there is a trade-off between inflation and unemployment. Milton Friedman challenged the Keynesian analyses of the Phillips curve in the mid-1960s (Friedman, 1977). Galbraith’s 16-page draft manuscript provides us an incisive summary of Galbraith’s views about the causes of stagflation and what can be done about it. He provides us with an alternative to the neoclassical synthesis of Samuelson and Solow and the neoliberal thinking of Milton Friedman and F.A. Hayek.

The labor market responds in a differentiated manner during recessions and expansions, and it is of vital importance to know the magnitude asymmetries. The purpose of this paper is to evaluate the effects of the disinflationary monetary policy (2005Q1–2022Q4) through the sacrifice rate measured in terms of unemployment and rate of critical labor conditions (RCLC) with nonlinear auto regressive distributed lag (NLARDL; Shin et al., 2014), which allows to efficiently estimate asymmetric effects in short and long terms in the presence of variables of different integration orders.

The authors estimate an asymmetric accelerationist Phillips curve, augmented with labor precariousness for Mexico (2005Q1–2022Q4) following the NLARDL approach (Shin et al., 2014).

The authors prove that the increase in the unemployment gap has greater disinflationary effects than the RCLC in both the short and the long term; the expansionary phases of the business cycle, which reduce U^Gap, do not have inflationary effects either in the short or in the long run, but improvements in the labor market do, when RCLC is reduced; raising RCLC appears to have been the companies’ main survival strategy since 2015; and these asymmetries can generate a low unemployment trap with high and growing precariousness, with huge dynamic costs for well-being, economic growth, inequality and poverty.

As labor precariousness grows, the implications are several both in the short and long run. In the short run, the most notorious example of the effects on workers has to do with unstable and insecure situations, that disrupt all their life planning options, and health issues. Bohle et al. (2004) found in the Organization for Economic Cooperation and Development countries that casual employees had less desirable and predictable working hours, greater work–life conflict and more associated health complaints than people with permanent jobs.

The approach includes the labor precariousness variable, which describes a new phenomenon in the labor market. Nowadays, workers are facing a new threat since firms are employing a new labor cost reduction strategy in which they do not lay off workers but rather paying them less, working them more hours, or reducing benefits. The asymmetries between the effects of precarity and unemployment can generate a poverty trap in the long run. This problem is, once again, of great relevance in the context of global high inflation.

This study examines the influence of the global geopolitical risk (GPR) on the relationship between oil prices and domestic food prices under the augmented Phillips curve framework.

Using monthly data on Nigeria from January 1995 to December 2021, the authors accommodate symmetry and asymmetry by adopting the linear and nonlinear autoregressive distributed lag, linear and nonlinear Granger causality tests.

The study establishes the positive and significant effects of both oil prices and GPR on food prices in the long and short run, though with a small magnitude in the short run. The asymmetric model shows that, while oil price shocks (positive and negative) exert a positive influence on food prices in the long-run, the effects of oil price shocks differ when accounting for GPR in the short-run. The coefficients of the interactive term, being the moderator of GPR between oil-food prices, are positively significant across models, suggesting that they jointly influence food prices when assuming linearity. The nonlinear model shows that the positive and negative components of interactive terms exert a positively significant influence on food prices, even though food prices tend to be more reactive to positive oil price shocks. The robustness checks show a unidirectional causal flow from oil prices and GPR to food prices under the linear and nonlinear models.

The authors examine the moderating effect of the newly developed global GPR index of Caldara and Iacoviello (2022) on the oil–food inflation relationship in Nigeria by applying the symmetric and asymmetric approaches.

This paper aims to revisit the theme of fiscal-monetary coordination in a general equilibrium setup that allows for unconventional monetary policy, monetary policy transmission and developing country characteristics.

This paper uses a calibrated new Keynesian dynamic stochastic general equilibrium (DSGE) model to study fiscal-monetary interaction.

Debt sits at the center of monetary-fiscal interaction. Under high-debt conditions, the inflation-output trade-off rises with an increase in the strictness with which monetary policy targets inflation, undermining the standard prescription of strict inflation targeting. At the same time, the transmission of monetary policy is also impeded, due to which unconventional monetary policy becomes more appropriate. The need for coordination among the policies gets enhanced in the presence of borrowing cost channel. While the presence of borrowing cost channel increases the need for policy coordination regardless of the debt situation, features like higher share of non-Ricardian households and weaker monetary policy transmission affect monetary-fiscal interaction to a greater extent under high-debt environment.

First, this paper uses inflation-output trade-off as a metric, to analyze fiscal-monetary interaction. Second, this paper considers the impact of developing country characteristics (such as a higher share of non-Ricardian households, impeded monetary policy transmission and supply constraints/borrowing cost channel) on fiscal-monetary interaction. Third, the DSGE model developed in this paper incorporates open market operations that could shed light on the role of unconventional monetary policy in the presence of high fiscal deficit and debt, which is particularly relevant in the current context of the COVID-19 pandemic. Fourth, the model also permits an investigation into monetary policy transmission under different debt regimes.

Despite being a flexible tool that can address several macroeconomic issues, Dynamic Stochastic General Equilibrium (DSGE) models have been rarely used to analyse the interaction between monetary and fiscal policy until the post-financial crisis, leaving a gap in the analysis of how government consumption affects the transmission mechanism of monetary policy. This motivates this paper to analyse how government consumption affects the dynamics of a small open economy, once the former is included in a non-separable form to the utility function. To the best of the authors' knowledge, this issue has not been addressed by the literature, and the authors aim to do so in this paper.

A standard New Keynesian model for a small open economy is used to allow for the presence of non-separable government consumption in the utility function. The model is supported by panel regressions.

The inclusion of Government consumption dampens the transmission mechanism of monetary policy. The degree of openness dampens the crowding out effect of fiscal policy to monetary policy, as the exchange rate channel empowers it. Empirical estimates for 35 OECD countries support the theoretical findings of the model.

The effect of government consumption on the transmission mechanism of MP has not been addressed in the literature. This paper contributes to the literature by addressing this issue.

• • The inclusion of Government consumption dampens the transmission mechanism of monetary policy.

• • The degree of openness alleviates the crowding out effect of fiscal policy to monetary policy, as the exchange rate channel empowers it.

• • Empirical estimates for 35 OECD countries support the theoretical findings of the model.

• The inclusion of Government consumption dampens the transmission mechanism of monetary policy.

• The degree of openness alleviates the crowding out effect of fiscal policy to monetary policy, as the exchange rate channel empowers it.

• Empirical estimates for 35 OECD countries support the theoretical findings of the model.