Drivers of underlying inflation in the euro area over time: a Phillips curve perspective
Elena Bobeica () and
Andrej Sokol ()
Economic Bulletin Articles, 2019, vol. 4
In this article we review the evolution of euro area HICP inflation excluding energy and food since the Great Financial Crisis through the lens of the Phillips curve. This period is particularly interesting, as the euro area experienced two recessions (in 2008-2009 and 2011-2014) and a protracted episode of low inflation from 2013 onwards. We estimate a large set of Phillips curve models for the euro area and review the interpretation of inflation developments that they provide over time. We highlight both the advantages and some of the limitations of this type of analysis. We find that our models can account for much of the weakness in underlying inflation between 2013 and mid-2017, but that they cannot account for the most recent weakness in underlying inflation. JEL Classification: E31, E58
Keywords: euro area inflation; Phillips curve; Underlying inflation (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbart:2019:0004:2
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