Before I continue, I’ll give the standard Fed disclaimer that the views I express are mine alone and do not necessarily reflect those of the Federal Open Market Committee or anyone else in the Federal Reserve System. Has the Phillips Curve Changed, or Is it a Trick of the Data? Throughout the paper, HMS use a reduced-form Phillips curve regression as a basis for their analysis. For my remarks, I simplify the specification and assume the inflation rate depends on the unemployment gap (and variants thereof), four lags of inflation, and a constant (relative to HMS, I have dropped the import price and inflation expectations terms). 1/4  BIS central bankers' speeches  Overall, the results for the core personal consumption expenditures (PCE) price index inflation using this simplified specification are quite similar to those reported in HMS. The full-sample (1961-2017) estimated coefficients using the core PCE price inflation rate are reported in the first column of the upper part of Table 1. The second column reports results corresponding to the “spline” specification of HMS, where positive values of the unemployment gap are added to the equation to capture asymmetry in the response of inflation to labor market tightness versus slack. The third and fourth columns of Table 1 report the corresponding estimation results for the subsample of 1961-1987, and the final two columns report the results for the subsample 19882017. Like HMS, the latter sample shows far less intrinsic persistence in inflation and a severe flattening of the Phillips curve relative to the full-sample results.

The geographical proximity and cultural similarities have been reinforced by the diverse strengths that exists in the region. These factors have been important in enhancing the integration process. As this greater regional economic and financial integration is advanced, it will serve as a powerful catalyst for the future expansion of intra-regional trade and investment, creating a self-sustaining and mutually reinforcing economic growth in the New Nusantara region. Ladies and gentlemen: It is my pleasure today to speak on the potential role of an integrated economic and financial platform within the Nusantara region, a region of rapid economic growth in which almost 300 million Muslims resides. My remarks will focus on the potential generated by a collaborative platform and the significance of building linkages between the Nusantara region with other parts of the world. The region's current economic progress, prosperity and financial stability has now accorded us a new strategic window of opportunity to develop new value propositions to unleash the full potential accorded by the accelerating economic and financial integration process. There are already encouraging formal and informal inter linkages between our respective financial markets as well as a higher level of engagement between the respective corporate communities, the market participants and the authorities. A collaborative platform that is based on the diverse comparative advantages of the Nusantara economies can benefit from the complementarities between our respective economies. Essentially, these opportunities will increase the potential to expand markets, increase products lines and deepen the research and development capabilities.