DP10010 | The Phillips Curve in Ireland: 1935 - 2012

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We study the determination of Irish inflation between 1935 and 2012 using a Phillips curve approach. We find that a simple backward-looking Phillips Curve that incorporates import prices is stable over the sample period and passes a number of diagnostic tests. We also consider the importance of UK and euro area inflation for Irish inflation. While UK inflation is significant in the period 1935 ? 1979, and euro area inflation is significant in the period 1980 ? 2012, we present evidence that suggests that these findings reflect common shocks.