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The slope of the Phillips Curve: evidence from U.S. States

Hazell, Joe, Herreño, Juan, Nakamura, Emi and Steinsson, Jón (2022) The slope of the Phillips Curve: evidence from U.S. States. Quarterly Journal of Economics, 137 (3). pp. 1299-1344. ISSN 0033-5533

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Identification Number: 10.1093/qje/qjac010


We estimate the slope of the Phillips curve in the cross section of U.S. states using newly constructed state-level price indices for nontradeable goods back to 1978. Our estimates indicate that the slope of the Phillips curve is small and was small even during the early 1980s. We estimate only a modest decline in the slope of the Phillips curve since the 1980s. We use a multiregion model to infer the slope of the aggregate Phillips curve from our regional estimates. Applying our estimates to recent unemployment dynamics yields essentially no missing disinflation or missing reinflation over the past few business cycles. Our results imply that the sharp drop in core inflation in the early 1980s was mostly due to shifting expectations about long-run monetary policy as opposed to a steep Phillips curve, and the greater stability of inflation between 1990 and 2020 is mostly due to long-run inflation expectations becoming more firmly anchored.

Item Type: Article
Official URL:
Additional Information: © 2022 The Authors
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
JEL classification: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E30 - General
Date Deposited: 05 Jan 2022 14:30
Last Modified: 15 Sep 2023 16:59

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