Template-Type: ReDIF-Article 1.0
Author-Name: Szabolcs Szentmihályi
Author-Name: Balázs Világi
Author-Workplace-Name: Magyar Nemzeti Bank
Author-Email: szentmihalyisz@mnb.hu
Author-Email: vilagib@mnb.hu
Title: The Phillips curve – history of thought and
empirical evidence
Abstract: The Phillips curve is one of the best known, most discussed and most often used
macroeconomic relationships. As a result of the severe, prolonged global recession
that unfolded in the wake of the 2007–2008 financial crisis, special attention was
paid to the issue of the slope of the curve. In spite of the protracted recession, the
decline in inflation remained moderate, and although it reached a much lower
level than before, permanent deflation did not occur.
According to most of the empirical studies, flattening of the Phillips curve was
observed in the past decades, i.e. the coefficient of the output gap declined
significantly. Although this process started prior to the crisis, the crisis amplified it
considerably. The main underlying reasons for these developments are attributable
to changes in corporate pricing behaviour and to the process of globalisation, as
well as to the fact that downward nominal wage rigidities made the Phillips curve
even flatter in the low inflation environment following the crisis.
Classification-JEL: E52, E32, C53
Keywords: macroeconomics, economic policy, monetary police, Phillips curve
Journal: Financial and Economic Review  
Pages: 5–38
Volume: 14
Issue: 4
Year: 2015
File-URL: http://hitelintezetiszemle.hu/letoltes/1-szentmihalyi-vilagi.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:14:y:2015:i:4:p:5-38