Data and Code for: "Monetary Policy when the Phillips Curve is Quite Flat"

Monetary Policy when the Phillips Curve is Quite Flat<br><br>Paul Beaudry, Chenyu Hou and Franck Portier<br><br>This paper highlights how the presence of a cost channel of monetary policy can offer new insights into the relation between monetary policy and inflation when the Phillips curve is quite flat. For instance, we highlight a key condition whereby lax monetary policy can push the economy in a low inflation trap and we discuss how, under the same condition, standard policy rules for targeting inflation may need to be modified. In the empirical part of the paper we explore the relevance of the conditions that give rise to these observations. To this end, we present both (i) a wide set of estimates derived from single-equation estimation of the US Phillips curve and (ii) estimates based on structural estimation of a full model. The results from both sets of empirical exercises strongly support the key condition we emphasize.