Recent research, to be presented today, suggests that the slope of the Phillips curve may depend on the inflation environment, with the curve potentially becoming steeper when inflation is high. The evidence is still scarce, however, and more research is needed. Moreover, numerous questions remain unanswered.
How high and how persistent does inflation need to be for the frequency of price changes to increase significantly? How would this affect the strength of the selection effect? And could real rigidities become weaker, for example because real wages adjust faster or price-setters pay more attention to inflation?