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Working Paper
A Decomposition of the Phillips Curve’s Flattening
While the original papers on the inflation-unemployment relationship, i.e., the Phillips curve, studied aggregate data, a recent generation of work has moved to regional analysis. We estimate Phillips curves in the US based on regional data between 1958 and 2013, from which we can recover the national Phillips Curve. We find that the curves’ evolution over time is characterized by changing cross-region spillovers largely due to a subset of 1970s observations. We show that for these observations, regional inflation exhibits strong negative comovement with national unemployment even after ...