Anatomy (not Autopsy) of the Phillips Curve

Simone Lenzu
Additional contact information
Simone Lenzu: https://resources.newyorkfed.org/research/economists/Lenzu

No 20260204, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: The relationship between inflation and real economic activity has long been central to debates in macroeconomics and monetary policy. At the core of this debate is the Phillips curve (PC), which measures how strongly inflation reacts to movements in economic conditions. The steepness of this curve matters enormously for monetary policy: if the PC is steeper, inflation rises faster during booms and falls faster in recessions, which entails central banks having to act more forcefully if they want to stabilize inflation around their target. Prior analysis found astonishingly small estimates of the slope of the PC, which suggests that the curve is “flat” (or even dead). In this post, I present evidence from coauthored research showing that, contrary to the conventional view, the Phillips curve is alive and steep, and it captures inflation volatility remarkably well once real marginal cost is used instead of standard real economic activity measures.

Keywords: price level; inflation; business fluctuations; Phillips curve (search for similar items in EconPapers)
JEL-codes: E31 E32 (search for similar items in EconPapers)
Date: 2026-02-04
References: Add references at CitEc
Citations:

Downloads: (external link)
https://libertystreeteconomics.newyorkfed.org/2026 ... -the-phillips-curve/ Full text (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednls:102400

Ordering information: This working paper can be ordered from

DOI: 10.59576/lse.20260204

Access Statistics for this paper

More papers in Liberty Street Economics from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().