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.Nonlinear Phillips curve ; Price stability ; Kernel smoothing.