Analysing euro area inflation outlook with the Phillips curve

Sami Oinonen, Lauri Vilmi

This paper presents the New Keynesian Phillips Curve (NKPC) -based framework for analysing euro area inflation outlook. Our NKPC specification, that relies on market- and survey-based inflation expectations, explains well euro area inflation dynamics. Its forecasting performance is also comparable to the performance of the ECB's official forecasts in both short- and long-horizons. Overall, the NKPC is a useful tool for monitoring euro area inflation outlook. Thanks to its fast and light updating procedure it provides almost real-time information on inflation outlook.

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Year of publication:	[2021]
Authors:	Oinonen, Sami ; Vilmi, Lauri
Publisher:	Helsinki : Bank of Finland
Subject:	euro area \| inflation expectations \| inflation forecasting \| Phillips curve \| Phillips-Kurve \| Eurozone \| Euro area \| Inflationserwartung \| Inflation expectations \| Inflation \| EU-Staaten \| EU countries \| Prognoseverfahren \| Forecasting model