The authors of the WP/23/100 IMF Working Paper "Has the Phillips Curve Become Steeper?" examine whether structural changes in advanced economies after the pandemic have made the Phillips curve steeper, reversing the trend of flattening observed in recent decades and reducing the sacrifice ratio associated with disinflation. Using granular price quote data from the UK, the authors find that increased digitalization may have raised price flexibility, while de-globalization may have made inflation more responsive to domestic demand. The findings suggest that the shape of the Phillips curve may have changed in response to structural changes in the aftermath of the pandemic, but further research is needed to fully understand the implications of these changes.
