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Has the Phillips curve flattened?

Author

Listed:
  • Barbara Rossi

    (ICREA-Pompeu Fabra University)

  • Atsushi Inoue

    (Vanderbilt University)

  • Yiru Wang

    (Pittsburgh University)

Abstract

We contribute to the recent debate on the instability of the slope of the Phillips curve by offering insights from a flexible time-varying instrumental-variables approach robust to weak instruments. Our robust approach focuses directly on the Phillips curve and allows general forms of instability, in contrast to current approaches based either on structural models with time-varying parameters or on instrumental-variables estimates in ad hoc subsamples. We find evidence of a weakening of the slope of the Phillips curve starting around 1980. We also offer novel insights on the Phillips curve during the recent pandemic: the flattening has reverted and the Phillips curve is back.

Suggested Citation

  • Barbara Rossi & Atsushi Inoue & Yiru Wang, 2024. "Has the Phillips curve flattened?," French Stata Users' Group Meetings 2024 22, Stata Users Group.
    • Handle: RePEc:boc:fsug24:22
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    References listed on IDEAS

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    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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