Understanding the flattening Phillips curve

Kenneth Kuttner and Tim Robinson

The North American Journal of Economics and Finance, 2010, vol. 21, issue 2, 110-125

Abstract: Policy-makers have recently noted an apparent flattening of the Phillips curve. The implications of such a change include that a positive output gap would be less inflationary, but the cost of reducing inflation, once established, would increase. This paper's objective is to review the evidence and possible explanations for the flattening of the Phillips curve in the context of new-Keynesian economic theory. Using data for the United States and Australia, we find that the flattening is evident in the baseline [`]structural' new-Keynesian Phillips curve. We consider a variety of reasons for this structural flattening, such as data problems, globalisation and alternative definitions of marginal cost, none of which is entirely satisfactory.

Keywords: Phillips; curve; Inflation (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (77)

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Related works:
Working Paper: Understanding the Flattening Phillips Curve (2008)
Working Paper: Understanding the Flattening Phillips Curve (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:21:y:2010:i:2:p:110-125

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