DP10010 The Phillips Curve in Ireland: 1935 - 2012

Author(s): Stefan Gerlach, Reamonn Lydon, Rebecca Stuart
Publication Date: June 2014
Keyword(s): Historical statistics, Import prices, Inflation, Ireland, Output gap
JEL(s): E3, E4, N14
Programme Areas: International Macroeconomics, Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=10010

We study the determination of Irish inflation between 1935 and 2012 using a Phillips curve approach. We find that a simple backward-looking Phillips Curve that incorporates import prices is stable over the sample period and passes a number of diagnostic tests. We also consider the importance of UK and euro area inflation for Irish inflation. While UK inflation is significant in the period 1935 ? 1979, and euro area inflation is significant in the period 1980 ? 2012, we present evidence that suggests that these findings reflect common shocks.