A nuanced analysis of the post-pandemic steepening of the Phillips Curve

Tristan Canare

Central Bank Review, 2026, vol. 26, issue 2

Abstract: Recent studies suggest that the Phillips Curve has become steeper in the post-Covid19 period. These studies used data from advanced economies and identified several factors for this phenomenon, including high inflation and de-globalization. These factors, however, are highly heterogeneous across countries depending on their characteristics. This begs the question of whether the post-pandemic Phillips Curve steepening is universal or nuanced among countries with certain attributes. Using data from 56 economies of varying income levels and characteristics, this study finds that, on average, the Phillips Curve steepened after the pandemic. However, there are important nuances to this finding. This study also shows that the steepening of the Phillips Curve in the post-pandemic period is stronger among economies i) that experienced a larger increase in inflation post-Covid19, ii) whose unemployment gap declined or barely grew in the post-pandemic period, and iii) whose trade intensity decreased or barely increased after the Covid19 period. The post-pandemic steepening of the Phillips Curve is also observed when output gap was used to measure slack and when core inflation was used instead of headline inflation, albeit there are some differences on the drivers of post-pandemic steepening with these specifications.

Keywords: Phillips curve; Inflation; Unemployment gap; Pandemic (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:cebare:v:26:y:2026:i:2:article:100258

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