Has the Phillips Curve Turn into Steeper?

This paper analyzes whether or not structural modifications within the aftermath of the pandemic have steepened the Phillips curves in superior economies, reversing the flattening noticed in current many years and lowering the sacrifice ratio related to disinflation. Significantly, evaluation of granular value quote information from the UK signifies that elevated digitalization might have raised value flexibility, whereas de-globalization might have made inflation extra aware of home financial circumstances once more.

Utilizing sectoral information from 24 superior economies in Europe, larger digitalization and decrease commerce depth are proven to be related to steeper Phillips curves. Put up-pandemic Phillips curve estimates point out some steepening within the UK, Spain, Italy and the euro space as an entire, however at magnitudes which might be too small to clarify the whole surge in inflation in 2021–22, suggesting an necessary function for outward shifts within the Phillips curve.