Imperfect information, composition of demand shocks, and the flattening of the Phillips curve.
We study why inflation responds differently to economic activity over time. Using survey data covering the universe of Japanese firms, we show that firms are unable to perfectly distinguish aggregate from sector-specific demand changes, leading to positively correlated expectations about these two c...
| Publicado en: | Oxford Economic Papers Vol. 78; no. 3; pp. 613 - 642 |
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| Autores principales: | , , |
| Formato: | Artículo |
| Publicado: |
Oxford University Press / USA
Jul2026
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=196419363&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 196419363 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 00307653 OXE jtl: Oxford Economic Papers issn: 00307653 maglogo: N pubinfo: dt: Jul2026 vid: 78 iid: 3 pid: 622 pub: Oxford University Press / USA artinfo: ui: 196419363 10.1093/oep/gpag021 ppf: 613 ppct: 29 formats: tig: atl: Imperfect information, composition of demand shocks, and the flattening of the Phillips curve. aug: au: Okuda, Tatsushi Tsuruga, Tomohiro Zanetti, Francesco affil: Bank of Japan, 2-1-1 Nihonbashi-Hongokucho, Chuo-ku, Tokyo 103-0021, Japan International Monetary Fund, 700 19th Street, N.W., Washington, DC 20431, United States Department of Economics, University of Oxford, Manor Road, Oxford OX1 3UQ, United Kingdom su: Supply & demand Price inflation Economic activity Information asymmetry Phillips curve Aggregate demand sug: subj: Supply & demand Price inflation Economic activity Information asymmetry Phillips curve Aggregate demand keyword: C72 copyrightHolder:Oxford University Press copyrightYear:2026 D82 E31 imperfect information inflation dynamics inLanguage:en publisher:Oxford University Press sameAs:https://dx.doi.org/10.1093/oep/gpag021 shock heterogeneity survey of expectations of Japanese firms C72 copyrightHolder:Oxford University Press copyrightYear:2026 D82 E31 imperfect information inflation dynamics inLanguage:en publisher:Oxford University Press sameAs:https://dx.doi.org/10.1093/oep/gpag021 shock heterogeneity survey of expectations of Japanese firms ab: We study why inflation responds differently to economic activity over time. Using survey data covering the universe of Japanese firms, we show that firms are unable to perfectly distinguish aggregate from sector-specific demand changes, leading to positively correlated expectations about these two components. We develop a model with imperfect information that reproduces this pattern and predicts that higher relative volatility of sector-specific demand reduces the sensitivity of inflation to changes in aggregate demand, thus flattening the Phillips curve. Testing this prediction with Japanese data from 1976 to 2022, we find that increases in the volatility of sectoral demand shocks explain significant changes in the Phillips curve slope over the sample period. Our results provide a novel explanation for the flattening of the Phillips curve: the composition of shocks—not just their magnitude—critically affects the sensitivity of inflation to aggregate demand. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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