{"title":"Examining the New Keynesian Phillips Curve in the U.S.: Why has the relationship between inflation and unemployment weakened?","authors":"Rouven E. Haschka","doi":"10.1016/j.rie.2024.100987","DOIUrl":null,"url":null,"abstract":"<div><p>This paper conducts a comprehensive review of the relationship between inflation and unemployment in the U.S. as described by the Phillips curve in a New Keynesian framework and investigates whether this relationship has changed systematically over time. We also aim to identify possible explanations for these changes. Three different hypotheses are discussed to assess whether they are consistent with more recent developments, such as the evolution of inflation expectations, the impact of globalization, and possible nonlinearities in the functional shape of the Phillips curve. We find that the relationship between inflation and unemployment has weakened since the 1980s and especially during the Covid-19 pandemic due to forces of globalization and better anchored inflation expectations resulting from more credible monetary policy. This has led to question of whether the Phillips curve is outdated. We conclude with the implications of these findings for the conduct of monetary policy.</p></div>","PeriodicalId":46094,"journal":{"name":"Research in Economics","volume":"78 4","pages":"Article 100987"},"PeriodicalIF":1.2000,"publicationDate":"2024-08-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S1090944324000516/pdfft?md5=379ad262b8afc3e0f2b94970f1ddd50d&pid=1-s2.0-S1090944324000516-main.pdf","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Research in Economics","FirstCategoryId":"1085","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1090944324000516","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
This paper conducts a comprehensive review of the relationship between inflation and unemployment in the U.S. as described by the Phillips curve in a New Keynesian framework and investigates whether this relationship has changed systematically over time. We also aim to identify possible explanations for these changes. Three different hypotheses are discussed to assess whether they are consistent with more recent developments, such as the evolution of inflation expectations, the impact of globalization, and possible nonlinearities in the functional shape of the Phillips curve. We find that the relationship between inflation and unemployment has weakened since the 1980s and especially during the Covid-19 pandemic due to forces of globalization and better anchored inflation expectations resulting from more credible monetary policy. This has led to question of whether the Phillips curve is outdated. We conclude with the implications of these findings for the conduct of monetary policy.
期刊介绍：
Established in 1947, Research in Economics is one of the oldest general-interest economics journals in the world and the main one among those based in Italy. The purpose of the journal is to select original theoretical and empirical articles that will have high impact on the debate in the social sciences; since 1947, it has published important research contributions on a wide range of topics. A summary of our editorial policy is this: the editors make a preliminary assessment of whether the results of a paper, if correct, are worth publishing. If so one of the associate editors reviews the paper: from the reviewer we expect to learn if the paper is understandable and coherent and - within reasonable bounds - the results are correct. We believe that long lags in publication and multiple demands for revision simply slow scientific progress. Our goal is to provide you a definitive answer within one month of submission. We give the editors one week to judge the overall contribution and if acceptable send your paper to an associate editor. We expect the associate editor to provide a more detailed evaluation within three weeks so that the editors can make a final decision before the month expires. In the (rare) case of a revision we allow four months and in the case of conditional acceptance we allow two months to submit the final version. In both cases we expect a cover letter explaining how you met the requirements. For conditional acceptance the editors will verify that the requirements were met. In the case of revision the original associate editor will do so. If the revision cannot be at least conditionally accepted it is rejected: there is no second revision.
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