2022/02/14 by Jonathon Hazell, Juan Herreño, Emi Nakamura +1 · 2 citations
Economics, Econometrics and Finance · #Disinflation #Econometrics #Economic Theory and Policy #Economics #Global Financial Crisis and Policies #Inflation (cosmology) #Keynesian economics #Macroeconomics #Monetary Policy and Economic Impact #Monetary policy #NAIRU #Phillips curve #Physics #Unemployment
paper · open access · doi:10.1093/qje/qjac010
published in The Quarterly Journal of Economics 137(3), 1299-1344 (Oxford University Press)
openalex publication_date 2022/02/14 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
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.