The Slope of the Phillips Curve for Service Prices in Japan: Regional Panel Data Approach
May 1, 2023
We estimate the slope of the Phillips curve for service prices in Japan using prefecture-level panel data, where we control the impact of inflation expectations on inflation by including time-fixed effects instead of proxies for inflation expectations. Our estimates indicate the flattening of the slope of the Phillips curve for the majority of seven subgroups in services since the 2000s. We also examine for any changes in the slope of the Phillips curve in the 2010s and during the Covid-19 pandemic, but observe no clear evidence of such changes.
C32, C33, E31, E52
Phillips curve, Service prices, Inflation expectations, Inflation dynamics
The authors thank Kosuke Aoki, Seisaku Kameda, Ryo Jinnai, Jouchi Nakajima, and staff members of the Bank of Japan for their valuable comments. All remaining errors are our own. The views expressed in this paper are those of the authors and do not necessarily reflect the official views of the Bank of Japan.
- *1Research and Statistics Department, Bank of Japan
E-mail : email@example.com
- *2Research and Statistics Department, Bank of Japan (currently International Monetary Fund)
E-mail : TOkuda@imf.org
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