Some international evidence on the Lucas Supply Function

We provide empirical evidence on the Lucas Supply Function based on actual inflation surprises for 19 industrial economies. Our results show that the inflation surprise positively correlates with the output gap and that this relationship is negatively related to inflation variability.

► We provide evidence on the Lucas Supply Function based on actual inflation surprises. ► Results show that inflation surprises are positively correlated with the output gap. ► This relationship is negatively related to inflation variability.