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Does the Phillips curve still exist?


  • Clémence Berson
  • Louis de Charsonville
  • Pavel Diev
  • Violaine Faubert
  • Laurent Ferrara
  • Sophie Guilloux-Nefussi
  • Yannick Kalantzis
  • Antoine Lalliard
  • Julien Matheron
  • Matteo Mogliani


Estimates from the Banque de France show that the slope of the Phillips curve in the euro area has remained weak but stable and significantly different from zero since the crisis. In the G7 countries, the coefficient of past inflation has become relatively insignificant since the 1980s,suggesting a shift towards a so-called “non-accelerating” curve. Global demand conditions are captured by import prices, including oil prices. The persistence of a negative output gap and the fall in oil prices largely explain the low level of inflation in the euro area since 2014.However, other factors such as weak wage dynamics or even the risk of an unanchoring of inflation expectations may have played out, the latter risk having called for a strong monetary policy response.

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  • Clémence Berson & Louis de Charsonville & Pavel Diev & Violaine Faubert & Laurent Ferrara & Sophie Guilloux-Nefussi & Yannick Kalantzis & Antoine Lalliard & Julien Matheron & Matteo Mogliani, 2018. "Does the Phillips curve still exist?," Rue de la Banque, Banque de France, issue 56, february.
  • Handle: RePEc:bfr:rueban:2018:56

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    References listed on IDEAS

    1. Verdugo, Gregory, 2016. "Real wage cyclicality in the Eurozone before and during the Great Recession: Evidence from micro data," European Economic Review, Elsevier, vol. 82(C), pages 46-69.
    2. Petra Marotzke & Robert Anderton & Ana Bairrao & Clémence Berson & Peter Tóth, 2016. "Wage adjustment and employment in Europe," Discussion Papers 2016-19, University of Nottingham, GEP.
    3. Raphael A. Auer & Claudio Borio & Andrew Filardo, 2017. "The Globalisation of Inflation: The Growing Importance of Global Value Chains," CESifo Working Paper Series 6387, CESifo Group Munich.
    4. N. Chatelais & K. Schmidt, 2017. "The impact of import prices on inflation in the euro area," Rue de la Banque, Banque de France, issue 37, january..
    5. Chatelais, N. & De Gaye, A. & Kalantzis, Y., 2015. "Low inflation in the euro area: import prices and domestic slack," Rue de la Banque, Banque de France, issue 06, May..
    6. Elsby, Michael W.L., 2009. "Evaluating the economic significance of downward nominal wage rigidity," Journal of Monetary Economics, Elsevier, vol. 56(2), pages 154-169, March.
    7. Hervé Le Bihan, 2009. "1958-2008, avatars et enjeux de la courbe de Phillips," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(4), pages 81-101.
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