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Flattening of the Phillips Curve; Implications for Monetary Policy

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  • Dora M Iakova

Abstract

Over the past decade, inflation has become less responsive to domestic demand pressures in many industrial countries. This development has been attributed, in part, to globalization forces. A small macroeconomic model, estimated on UK data using Bayesian estimation, is used to analyze the monetary policy implications of this structural change. The focus is on the implications of a globalization-related flattening of the Phillips curve for the trade-off between inflation and output gap variability and for the efficient monetary policy response rule.

Suggested Citation

  • Dora M Iakova, 2007. "Flattening of the Phillips Curve; Implications for Monetary Policy," IMF Working Papers 07/76, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:07/76
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    Blog mentions

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    1. Faut-il revoir le mandat des banques centrales ?
      by ? in D'un champ l'autre on 2014-06-01 04:55:00

    Citations

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    Cited by:

    1. Troy Davig, 2016. "Phillips Curve Instability and Optimal Monetary Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 48(1), pages 233-246, February.
    2. Forges Davanzati, Guglielmo & Pacella, Andrea, 2013. "The profits-investments puzzle: A Post Keynesian-Institutional interpretation," Structural Change and Economic Dynamics, Elsevier, vol. 26(C), pages 1-13.
    3. Christian Dreger & Malte Rieth & David Pothier, 2015. "Is Globalization Reducing the Ability of Central Banks to Control Inflation? In-Depth Analysis," DIW Berlin: Politikberatung kompakt, DIW Berlin, German Institute for Economic Research, volume 106, number pbk106.
    4. Colacchio, Giorgio, 2014. "Taxation, income redistribution and debt dynamics in a seven-equation model of the business cycle," Journal of Economic Behavior & Organization, Elsevier, vol. 106(C), pages 140-165.
    5. Aaron G Grech, "undated". "The evolution of the Maltese economy since independence," CBM Working Papers WP/05/2015, Central Bank of Malta.
    6. Faith Christian Cacnio, 2013. "Analysing inflation dynamics in the Philippines using the new Keynesian Phililips curve," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 50(2), pages 53-82, December.
    7. Lucio Gobbi & Ronny Mazzocchi & Roberto Tamborini, 2018. "Monetary policy, de-anchoring of inflation expectations, and the 'new normal'," DEM Working Papers 2018/04, Department of Economics and Management.
    8. P. Ormerod & B. Rosewell & P. Phelps, 2013. "Inflation/unemployment regimes and the instability of the Phillips curve," Applied Economics, Taylor & Francis Journals, vol. 45(12), pages 1519-1531, April.
    9. repec:mlt:ebooks:02 is not listed on IDEAS
    10. Jakob de Haan & Marco Hoeberichts & Renske Maas & Federica Teppa, 2016. "Inflation in the euro area and why it matters," DNB Occasional Studies 1403, Netherlands Central Bank, Research Department.

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