A Phillips curve for the euro area

Arbeitspapier

This paper asks whether a textbook Phillips curve can explain the behavior of core inflation in the euro area. A critical feature of the analysis is that we measure core inflation with the weighted median of industry inflation rates, which is less volatile than the common measure of inflation excluding food and energy prices. We find that fluctuations in core inflation since the creation of the euro are well explained by three factors: expected inflation (as measured by surveys of forecasters); the output gap (as measured by the OECD); and the pass-through of movements in headline inflation. Our specification resolves the puzzle of a "missing disinflation" after the Great Recession, and it diminishes the puzzle of a "missing inflation" during the recent economic recovery.

Object Details

• ISBN: 978-92-899-3997-3
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 2354

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Business Fluctuations; Cycles
• Subject: Phillips curve ; euro area ; median inflation ; missing inflation ; missingdisinflation ; core inflation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ball, Laurence M. ; Mazumder, Sandeep
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2020

Further information

• DOI: doi:10.2866/364747
• Handle: http://hdl.handle.net/10419/228232
• Last update: 10.03.2025, 11:46 AM CET