The Slope of the Phillips Curve: Evidence from U.S. States

Jonathon Hazell, Juan Herreño, Emi Nakamura and Jon Steinsson
Additional contact information
Jonathon Hazell: Princeton University and LSE
Jon Steinsson: University of California, Berkeley
Authors registered in the RePEc Author Service: Stephen James Redding

Working Papers from Princeton University, Department of Economics, Center for Economic Policy Studies.

Abstract: We estimate the slope of the Phillips curve in the cross section of U.S. states using newly constructed state-level price indexes for non-tradeable goods back to 1978. Our estimates indicate that the slope of the Phillips curve is small and was small even during the early 1980s.We estimate only a modest decline in the slope of the Phillips curve since the 1980s. We use a multi-region model to infer the slope of the aggregate Phillips curve from our regional estimates. Applying our estimates to recent unemployment dynamics yields essentially no missing disinflation or missing reinflation over the past few business cycles. Our results imply that the sharp drop in core inflation in the early 1980s was mostly due to shifting expectations about long-run monetary policy as opposed to a steep Phillips curve, and the greater stability of inflation since the 1990s is mostly due to long-run inflationary expectations becoming more firmly anchored.

JEL-codes: E30 (search for similar items in EconPapers)
Date: 2021-04
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (6)

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https://gceps.princeton.edu/wp-content/uploads/2021/07/284_Hazell.pdf

Related works:
Journal Article: The Slope of the Phillips Curve: Evidence from U.S. States (2022)
Working Paper: The slope of the Phillips Curve: evidence from U.S. States (2022)
Working Paper: The Slope of the Phillips Curve: Evidence from U.S. States (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:pri:cepsud:284

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