Working Paper Series no. 140: Is the Inflation-Output Nexus Asymmetric in the Euro Area?

Abstract

This paper challenges the assumption that the inflation process within the euro area is well-described by a linear Phillips curve and investigates in a nonparametric framework how inflation is sensitive to output growth. An asymmetric output-inflation trade-off is pointed out in the euro area at both aggregated and individual country levels.

Mustapha Baghli, Christophe Cahn and Henri Fraisse
April 2006

Classification JEL : C14, C32, E31, E52.

Keywords : Nonlinear Phillips curve; price stability; kernel smoothing.