IDEAS home Printed from https://ideas.repec.org/p/fip/fedgfe/2024-43.html
   My bibliography  Save this paper

The Slope of the Phillips Curve

Author

Abstract

We review recent developments in the estimation and identification of the Phillips curve and its slope. We have three main objectives. First, we describe the econometric challenges faced by traditional approaches of estimating the Phillips curve, explain how new approaches address those challenges, and assess which limitations still remain. Second, we review the findings of those new approaches and examine the evidence regarding a potential flattening of the Phillipscurve in the pre-pandemic period. Third, we provide an account of inflation dynamics in the post-pandemic period with a particular emphasis on the role of nonlinearities.

Suggested Citation

  • Francesco Furlanetto & Antoine Lepetit, 2024. "The Slope of the Phillips Curve," Finance and Economics Discussion Series 2024-043, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2024-43
    DOI: 10.17016/FEDS.2024.043
    as

    Download full text from publisher

    File URL: https://www.federalreserve.gov/econres/feds/files/2024043pap.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.17016/FEDS.2024.043?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Michael D. Bauer & Eric T. Swanson, 2023. "A Reassessment of Monetary Policy Surprises and High-Frequency Identification," NBER Macroeconomics Annual, University of Chicago Press, vol. 37(1), pages 87-155.
    2. Joris Tielens & Luca Gagliardone & Mark Gertler & Simone Lenzu, 2024. "Anatomy of the Phillips Curve: micro evidence and macro implications," Working Paper Research 453, National Bank of Belgium.
    3. Etienne Gagnon, 2009. "Price Setting during Low and High Inflation: Evidence from Mexico," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(3), pages 1221-1263.
    4. Bartosz Maćkowiak & Filip Matějka & Mirko Wiederholt, 2023. "Rational Inattention: A Review," Journal of Economic Literature, American Economic Association, vol. 61(1), pages 226-273, March.
    5. Benigno, Pierpaolo & Eggertsson, Gauti, 2023. "It's Baaack: The Surge in Inflation in the 2020s and the Return of the Non-Linear Phillips Curve," CEPR Discussion Papers 18116, C.E.P.R. Discussion Papers.
    6. Luca Gagliardone & Mark Gertler & Simone Lenzu & Joris Tielens, 2023. "Anatomy of the Phillips Curve: Micro Evidence and Macro Implications," NBER Working Papers 31382, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Staines, 2023. "Stochastic Equilibrium the Lucas Critique and Keynesian Economics," Papers 2312.16214, arXiv.org, revised Jun 2024.
    2. Roberto Tamborini, 2024. "Inflation surprises in a New Keynesian economy with a “true” consumption function," Economic Inquiry, Western Economic Association International, vol. 62(3), pages 1192-1215, July.
    3. Fernando Alvarez & Francesco Lippi & Juan Passadore, 2017. "Are State- and Time-Dependent Models Really Different?," NBER Macroeconomics Annual, University of Chicago Press, vol. 31(1), pages 379-457.
    4. Francesco Capozza & Ingar Haaland & Christopher Roth & Johannes Wohlfart, 2021. "Studying Information Acquisition in the Field: A Practical Guide and Review," CEBI working paper series 21-15, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    5. Mina Kim & Deokwoo Nam & Jian Wang & Jason J. Wu, 2013. "International trade price stickiness and exchange rate pass-through in micro data: a case study on U.S.–China trade," Globalization Institute Working Papers 135, Federal Reserve Bank of Dallas.
    6. Dixon, Huw D. & Grimme, Christian, 2022. "State-dependent or time-dependent pricing? New evidence from a monthly firm-level survey: 1980–2017," European Economic Review, Elsevier, vol. 150(C).
    7. Hobijn, Bart & Nechio, Fernanda & Shapiro, Adam Hale, 2021. "Using Brexit to identify the nature of price rigidities," Journal of International Economics, Elsevier, vol. 130(C).
    8. Schnorpfeil, Philip & Weber, Michael & Hackethal, Andreas, 2023. "Households' response to the wealth effects of inflation," SAFE Working Paper Series 400, Leibniz Institute for Financial Research SAFE.
    9. Etienne Gagnon & David López-Salido & Nicolas Vincent, 2013. "Individual Price Adjustment along the Extensive Margin," NBER Macroeconomics Annual, University of Chicago Press, vol. 27(1), pages 235-281.
    10. Giuntella, Osea & Rieger, Matthias & Rotunno, Lorenzo, 2020. "Weight gains from trade in foods: Evidence from Mexico," Journal of International Economics, Elsevier, vol. 122(C).
    11. Gautier, Erwan & Conflitti, Cristina & Faber, Riemer P. & Fabo, Brian & Fadejeva, Ludmila & Jouvanceau, Valentin & Menz, Jan-Oliver & Messner, Teresa & Petroulas, Pavlos & Roldan-Blanco, Pau & Rumler,, 2022. "New facts on consumer price rigidity in the euro area," Working Paper Series 2669, European Central Bank.
    12. Jessie Handbury & Tsutomu Watanabe & David E. Weinstein, 2013. "How Much Do Official Price Indexes Tell Us about Inflation?," NBER Working Papers 19504, National Bureau of Economic Research, Inc.
    13. Ariadne Checo & Francesco Grigoli & Damiano Sandri, 2024. "Monetary Policy Transmission in Emerging Markets: Proverbial Concerns, Novel Evidence," BIS Working Papers 1170, Bank for International Settlements.
    14. Maarten Dossche, 2009. "Understanding Inflation Dynamics.Where Do We Stand?," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business (FEB), Review of Business and Economic Literature, vol. 0(2), pages 209-227.
    15. Rumler, Fabio & Konieczny, Jerzy (Jurek) D., 2006. "Regular adjustment: theory and evidence," Working Paper Series 669, European Central Bank.
    16. Angel Espinoza E., 2024. "Public Transportation and Consumer Prices: Chain Stores, Street Vendors and Mom and Pop Stores," Working Papers 2024-02, Banco de México.
    17. Emmanuel Dhyne & Jerzy Konieczny, 2014. "Aggregation And The Staggering Of Price Changes," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 732-756, April.
    18. Emi Nakamura & Jón Steinsson, 2013. "Price Rigidity: Microeconomic Evidence and Macroeconomic Implications," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 133-163, May.
    19. Fernando Alvarez & Hervé Le Bihan & Francesco Lippi, 2013. "Small and Large Price Changes and the Propagation of Monetary Shocks," EIEF Working Papers Series 1318, Einaudi Institute for Economics and Finance (EIEF), revised Aug 2013.
    20. Jonathan J Adams & Philip Barrett, 2023. "Identifying News Shocks from Forecasts," Working Papers 001010, University of Florida, Department of Economics.

    More about this item

    Keywords

    Inflation dynamics; Phillips curve flattening; Phillips curve nonlinearities; Phillips curve slope;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedgfe:2024-43. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ryan Wolfslayer ; Keisha Fournillier (email available below). General contact details of provider: https://edirc.repec.org/data/frbgvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.