https://macropaperwarehouse.com/authors/chadwick-curtis/Chadwick CurtisHugo -- gohugo.ioen-usWed, 01 Jan 2025 00:00:00 +0000https://macropaperwarehouse.com/papers/does-the-phillips-curve-lie-down-as-we-age/Wed, 01 Jan 2025 00:00:00 +0000https://macropaperwarehouse.com/papers/does-the-phillips-curve-lie-down-as-we-age/<p>Research question and motivation: The paper asks whether population aging flattens the Phillips curve through a previously unexplored channel — age-related differences in the elasticity of substitution across product varieties. Existing work on demographics and monetary policy emphasizes wealth, liquidity, and life-cycle savings channels. The authors instead argue that if older consumers are less willing to substitute across varieties of goods (i.e., they have a lower elasticity of substitution), then firms selling to them have more market power, adjust prices less responsively to marginal cost, and the slope of the Phillips curve falls. Because advanced economies are simultaneously aging and exhibiting a flattening Phillips curve, this offers a structural, demographically-driven explanation.</p>