The Phillips Multiplier

29 Pages Posted: 28 Jan 2019

See all articles by Regis Barnichon

Regis Barnichon

Federal Reserve Bank of San Francisco

Geert Mesters

Universitat Pompeu Fabra

Date Written: January 2019


We propose a model-free approach for determining the inflation-unemployment trade-off faced by a central bank, i.e., the ability of a central bank to transform unemployment into inflation (and vice versa) via its interest rate policy. We introduce the Phillips multiplier as a statistic to non-parametrically characterize the trade-off and its dynamic nature. We compute the Phillips multiplier for the US, UK and Canada and document that the trade-off went from being very large in the pre-1990 sample period to being small (but significant) post-1990 with the onset of inflation targeting and the anchoring of inflation expectations.

Keywords: Dynamic Multiplier, Inflation-Unemployment trade-off, instrumental variables, Marginal Rate of Transformation, Phillips curve

JEL Classification: C14, C32, E32, E52

Suggested Citation

Barnichon, Regis and Mesters, Geert, The Phillips Multiplier (January 2019). CEPR Discussion Paper No. DP13480, Available at SSRN:

Regis Barnichon (Contact Author)

Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States

Geert Mesters

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, E-08005

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