Data and Code for: "Monetary Policy when the Phillips Curve is Quite Flat"
Principal Investigator(s): View help for Principal Investigator(s) Paul Beaudry, Bank of Canada/Banque du Canada; Chenyu Hou, Chinese University of Hong Kong; Franck Portier, University College London
Version: View help for Version V1
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| BHPFigureJ.2 | 02/21/2024 11:51:AM | ||
| BHPModelEstimation | 02/21/2024 11:15:AM | ||
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application/pdf | 176.9 KB | 02/23/2024 06:23:AM |
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application/x-tex | 8.3 KB | 02/23/2024 06:22:AM |
Project Description
Summary:
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Monetary Policy when the Phillips Curve is Quite Flat
Paul Beaudry, Chenyu Hou and Franck Portier
Paul Beaudry, Chenyu Hou and Franck Portier
This paper highlights how the presence of a cost channel of monetary policy can offer new insights into the relation between monetary policy and inflation when the Phillips curve is quite flat. For instance, we highlight a key condition whereby lax monetary policy can push the economy in a low inflation trap and we discuss how, under the same condition, standard policy rules for targeting inflation may need to be modified. In the empirical part of the paper we explore the relevance of the conditions that give rise to these observations. To this end, we present both (i) a wide set of estimates derived from single-equation estimation of the US Phillips curve and (ii) estimates based on structural estimation of a full model. The results from both sets of empirical exercises strongly support the key condition we emphasize.
Scope of Project
Subject Terms:
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Macroeconomics
JEL Classification:
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E32 Business Fluctuations; Cycles
E32 Business Fluctuations; Cycles
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