Sectoral Inflation and the Phillips Curve: What Has Changed Since the Great Recession?

20 Pages Posted: 16 Nov 2017 Last revised: 22 Nov 2017

See all articles by María José Luengo‐Prado

María José Luengo‐Prado

Federal Reserve Banks - Federal Reserve Bank of Boston

Nikhil Rao

Federal Reserve Banks - Federal Reserve Bank of Boston

Viacheslav Sheremirov

Federal Reserve Banks - Federal Reserve Bank of Boston

Date Written: 2017-11-01

Abstract

Using sectoral data at a medium level of aggregation, we find that price changes became less responsive to aggregate unemployment around 2009–2010. The slopes of the disaggregated Phillips curves diminished in many sectors, including housing and some services. We also document a decrease in sectoral inflation persistence, suggesting an increase in the weight of the forward-looking inflation expectation component and a decrease in the weight of the backward-looking component.

Keywords: disaggregate price indices, inflation persistence, Phillips curve

JEL Classification: E24, E31, E32

Suggested Citation

Luengo-Prado, Maria Jose and Rao, Nikhil and Sheremirov, Viacheslav, Sectoral Inflation and the Phillips Curve: What Has Changed Since the Great Recession? (2017-11-01). Federal Reserve Bank of Boston Research Paper Series Current Policy Perspectives Paper No. 17-5, Available at SSRN: https://ssrn.com/abstract=3072266

Maria Jose Luengo-Prado (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

Nikhil Rao

Federal Reserve Banks - Federal Reserve Bank of Boston

600 Atlantic Avenue
Boston, MA 02210
United States

Viacheslav Sheremirov

Federal Reserve Banks - Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

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