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Breaks in the Phillips Curve: Evidence From Panel Data

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  • Simon C. Smith
  • Allan Timmermann
  • Jonathan H. Wright

Abstract

We revisit the Phillips curve, applying new Bayesian panel methods with structural breaks to US and EU disaggregate data. Our approach lets us estimate both the number and timing of breaks and to determine the existence of clusters of industries, cities, or countries whose Phillips curves display similar patterns. We find evidence of a flattening for US sectoral data and among EU countries, particularly poorer ones. Evidence of flattening is weaker for MSA‐level data and the wage Phillips curve. We find evidence of a kink in the Phillips curve, which remains relatively steep when the economy is running hot.

Suggested Citation

  • Simon C. Smith & Allan Timmermann & Jonathan H. Wright, 2025. "Breaks in the Phillips Curve: Evidence From Panel Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 40(2), pages 131-148, March.
    • Handle: RePEc:wly:japmet:v:40:y:2025:i:2:p:131-148
    DOI: 10.1002/jae.3102
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