Is the Inflation-Output Nexus Asymmetric in the Euro Area?
Mustapha Baghli, Christophe Cahn and Henri Fraisse
April 2006
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.
Keywords: Nonlinear Phillips curve; price stability; kernel smoothing.
JEL Classification: C14, C32, E31, E52.
