ECB research finds Phillips curve still matters
Underlying relations are complicated, but slack and expectations still drive prices, economists say
The Phillips curve remains an important guide to monetary policy, but structural factors can still knock inflation off course for extended periods, research published by the European Central Bank finds.
The working paper examines the curve, which relates economic “slack” and inflation, through the lenses of several different ECB models, ranging from reduced-form econometric models to more theoretical, structural and semi-structural models.
The authors – ECB chief economist Philip Lane
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