The slope of the Phillips Curve: evidence from U.S. States

Joe Hazell, Juan Herreño, Emi Nakamura and Jón Steinsson

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We estimate the slope of the Phillips curve in the cross section of U.S. states using newly constructed state-level price indices for nontradeable goods back to 1978. Our estimates indicate that the slope of the Phillips curve is small and was small even during the early 1980s. We estimate only a modest decline in the slope of the Phillips curve since the 1980s. We use a multiregion model to infer the slope of the aggregate Phillips curve from our regional estimates. Applying our estimates to recent unemployment dynamics yields essentially no missing disinflation or missing reinflation over the past few business cycles. Our results imply that the sharp drop in core inflation in the early 1980s was mostly due to shifting expectations about long-run monetary policy as opposed to a steep Phillips curve, and the greater stability of inflation between 1990 and 2020 is mostly due to long-run inflation expectations becoming more firmly anchored.

JEL-codes: E30 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2022-08-01
New Economics Papers: this item is included in nep-his
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Citations: View citations in EconPapers (25)

Published in Quarterly Journal of Economics, 1, August, 2022, 137(3), pp. 1299-1344. ISSN: 0033-5533

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http://eprints.lse.ac.uk/113326/ Open access version. (application/pdf)

Related works:
Journal Article: The Slope of the Phillips Curve: Evidence from U.S. States (2022)
Working Paper: The Slope of the Phillips Curve: Evidence from U.S. States (2021)
Working Paper: The Slope of the Phillips Curve: Evidence from U.S. States (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:113326

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