A Reserve Bank of Australia paper, published on Tuesday, analyses a range of inflation models and finds the standard Phillips curve and mark-up models have performed better than the New Keynesian version over the past two decades.

The authors, David Norman and Anthony Richards, find traditional models, such as the expectations-augmented standard Phillips curve or mark-up models, outperform the more micro-founded New Keynesian Phillips curve in explaining trimmed mean inflation, both in terms of