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Sectoral Phillips curves and the aggregate Phillips curve

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  • Jean Imbs

    (Center for Economic Research - CEPR, PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Eric Jondeau

    (Swiss Finance Institute [Geneva] - Swiss Finance Institute, UNIL - Université de Lausanne)

  • Florian Pelgrin

    (UNIL - Université de Lausanne, CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal = University of Québec in Montréal)

Abstract

Sector-level Phillips curves are estimated in French data. There is considerable heterogeneity across sectors, with vastly different estimates of the backward looking component of inflation and the duration of nominal rigidities. A multi-sector model of inflation dynamics is calibrated on the basis of these sectoral estimates. Aggregate inflation, simulated on the basis of heterogeneous sectors, displays comparable dynamics to actual data. A comparison is drawn between the policy trade-offs implied by a Phillips curve based on macroeconomic estimates vs. one based on a model with heterogeneous sectors. The difference is sizeable.

Suggested Citation

  • Jean Imbs & Eric Jondeau & Florian Pelgrin, 2011. "Sectoral Phillips curves and the aggregate Phillips curve," Post-Print hal-00612310, HAL.
  • Handle: RePEc:hal:journl:hal-00612310
    DOI: 10.1016/j.jmoneco.2011.05.013
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00612310
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