Inflation and Unemployment, new insights during the EMU accession

Jean-Louis Combes (1) , Pierre Lesuisse (1)

1 CERDI - Centre d'Études et de Recherches sur le Développement International

In the process of EU integration, toward the EA accession, we try to understand, how changes in exchange rate regime, attributed to the switch through the ERM-II and to the EA accession, influence the dynamic between inflation and unemployment, i.e., shock on the Phillips curve coefficient. We look at a panel of countries, in the CEECs over the last twenty years, using a recent work from McLeay and Tenreyro (2020), to clarify the impact of loosing the monetary autonomy. Being under a pegged regime is not associated with a flattened Phillips curve. However, after the EA accession, the Phillips curve coefficient becomes not significant. This result is confirmed, looking at other small EA countries; while "economic leaders" tend to maintain a significant trade-off between inflation and unemployment. Using recent work from

Mots clés: Phillips curve; European Monetary Union; Panel

Domaines: Economies et finances

Jean-Louis Combes, Pierre Lesuisse. Inflation and Unemployment, new insights during the EMU accession. 2021. ⟨hal-03216478v2⟩