Nonlinearities in the Phillips Curve for the United States: Evidence Using Metropolitan Data

28 Pages Posted: 4 Jul 2017

See all articles by Nathan Babb

Nathan Babb

Board of Governors of the Federal Reserve System

Alan K. Detmeister

Board of Governors of the Federal Reserve System

Date Written: 2017-06-28

Abstract

With the unemployment rate in the United States currently below estimates of its natural rate we examine if the relationship between inflation and unemployment is nonlinear. Using aggregate data we are unable to reject a linear relationship. However, using metropolitan-level data we find the slope of the Phillips curve is roughly twice as large when unemployment is low compared to when it is high. Nevertheless the simple nonlinear Phillips curves used here suggest a core CPI inflation rate that is only slightly different than the linear version over the next couple of years.

Keywords: Core CPI Prices, Grid Searching, Metropolitan Statistical Area data, Phillips Curve

JEL Classification: E31

Suggested Citation

Babb, Nathan and Detmeister, Alan K., Nonlinearities in the Phillips Curve for the United States: Evidence Using Metropolitan Data (2017-06-28). FEDS Working Paper No. 2017-070, Available at SSRN: https://ssrn.com/abstract=2995873 or http://dx.doi.org/10.17016/FEDS.2017.070

Nathan Babb (Contact Author)

Board of Governors of the Federal Reserve System

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Alan K. Detmeister

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
74
Abstract Views
374
rank
406,476
PlumX Metrics