{
  "title": "Flattening of the Phillips Curve: Implications for Monetary Policy",
  "publication": "IMF Working Papers, April 1, 2007",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/flattening-of-the-phillips-curve-implications-for-monetary-policy-20530",
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  "summary": "Over the past decade, inflation has become less responsive to domestic demand pressures in many industrial countries. This development has been attributed, in part, to globalization forces.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Over the past decade, inflation has become less responsive to domestic demand pressures in many industrial countries.\n- This development has been attributed, in part, to globalization forces.\n- A small macroeconomic model, estimated on UK data using Bayesian estimation, is used to analyze the monetary policy implications of this structural change.\n- The focus is on the implications of a globalization-related flattening of the Phillips curve for:\n  - the trade-off between inflation and output gap variability, and\n  - the efficient monetary policy response rule."
    },
    {
      "heading": "Model and Methods",
      "content": "- Model type: small macroeconomic model.\n- Estimation approach: Bayesian estimation.\n- Data: UK data (as used in the model estimation)."
    },
    {
      "heading": "Key Findings",
      "content": "- Inflation has become less responsive to domestic demand pressures in many industrial countries over the past decade.\n- This reduced responsiveness is linked, in part, to globalization forces.\n- The flattening of the Phillips curve affects:\n  - the trade-off between inflation variability and output gap variability, and\n  - the design and performance of efficient monetary policy response rules."
    },
    {
      "heading": "Policy Implications",
      "content": "- Monetary policy must account for a globalization-related flattening of the Phillips curve when evaluating the trade-off between stabilizing inflation and stabilizing the output gap.\n- The efficient monetary policy response rule may need to be adjusted in light of a flatter Phillips curve to address the altered inflation-output gap relationship.\n\n---\n\n Content in this bundle\n\n- 1. Optimized Response Rule Coefficients\n  - 1. Optimized Response Rule Coefficients (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 1. Optimized Response Rule Coefficients (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/flattening-of-the-phillips-curve-implications-for-monetary-policy-20530"
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  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2016/12/31/flattening-of-the-phillips-curve-implications-for-monetary-policy-20530/index.md)",
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    "Authors: Dora M Iakova",
    "Published: April 1, 2007",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451866407.001",
    "Over the past decade, inflation has become less responsive to domestic demand pressures in many industrial countries.",
    "This development has been attributed, in part, to globalization forces.",
    "A small macroeconomic model, estimated on UK data using Bayesian estimation, is used to analyze the monetary policy implications of this structural change.",
    "The focus is on the implications of a globalization-related flattening of the Phillips curve for:",
    "Model type: small macroeconomic model.",
    "Estimation approach: Bayesian estimation.",
    "Data: UK data (as used in the model estimation).",
    "Inflation has become less responsive to domestic demand pressures in many industrial countries over the past decade.",
    "This reduced responsiveness is linked, in part, to globalization forces.",
    "The flattening of the Phillips curve affects:",
    "Monetary policy must account for a globalization-related flattening of the Phillips curve when evaluating the trade-off between stabilizing inflation and stabilizing the output gap.",
    "The efficient monetary policy response rule may need to be adjusted in light of a flatter Phillips curve to address the altered inflation-output gap relationship.",
    "**1. Optimized Response Rule Coefficients**"
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