Do IMF economists believe in the Phillips Curve? Evidence from the WEO country groups

This paper investigates whether forecasters at the International Monetary Fund rely on the Phillips curve when producing inflation forecasts, and whether this belief varies systematically across country groups. We use data from the World Economic Outlook database to test for evidence of Phillips curve dynamics in both forecasts and observables. We find strong evidence that IMF forecasts for advanced economies are theory-consistent and align with the relationship observed in ex-post data. In contrast, our results show an inverted or flat relationship in both forecasts and actuals for emerging market and developing economies, suggesting limited relevance of the Phillips curve framework in these country groups. Our findings are robust across time periods, forecast horizons, model specifications, and alternative measures of economic activity.