Sectoral Inflation and the Phillips Curve: What Has Changed Since the Great Recession?
20 Pages Posted: 16 Nov 2017 Last revised: 22 Nov 2017
Date Written: 2017-11-01
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: Suggested Citation