Flattening of the Phillips Curve: Implications for Monetary Policy
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Summary:
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.
Series:
Working Paper No. 2007/076
Subject:
Inflation Inflation targeting Monetary policy Output gap Prices Production
English
Publication Date:
April 1, 2007
ISBN/ISSN:
9781451866407/1018-5941
Stock No:
WPIEA2007076
Pages:
19
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