Emmanuel de Veirman

(De Nederlandsche Bank)

will give a presentation on

How Does the Phillips Curve Slope Relate to Repricing Rates?

Abstract: In sticky price models, the Phillips curve slope depends positively on the probability of price adjustment. I test this implication using a series for the empirical frequency of price adjustment. I find that empirically, the Phillips curve slope does depend positively on the repricing rate. My results support the implication from New Keynesian theory with Calvo pricing that the Phillips curve slope is a convex function of the repricing rate. However, at all observed values of the price adjustment frequency, the empirical Phillips curve is much flatter than sticky price models with Calvo pricing or state-dependent pricing would imply.