The Phillips curve in the euro area: New evidence using country-level data

Susanne Wellmann

No 156, University of Tübingen Working Papers in Business and Economics from University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics

Abstract: We study whether the trade-off between inflation and unemployment still exists in the euro area (EA). Using country-level data for member states of the EA, we estimate a refined specification of the Phillips curve in the spirit of Hazell et al. (2022) deploying a non-tradable price index to measure inflation. We find that the slope of the Phillips curve is small and hence the Phillips curve is flat in the EA, similarly to the US. Moreover, reference estimates based on aggregate data overstate the steepness of the Phillips curve considerably. Our findings imply that the insensitivity of inflation with respect to unemployment over the last decade is a result of firmly anchored inflation expectations.

Keywords: Inflation; Phillips curve; Expectations; Euro Area (search for similar items in EconPapers)
JEL-codes: D84 E31 F45 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-eec, nep-mfd and nep-mon
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuewef:156

DOI: 10.15496/publikation-79711

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