<scp>ENSO</scp>‐Augmented Phillips Curve: Evidence From Panel Local Projections

ABSTRACT This paper presents a state‐dependent extension of the Phillips Curve using a local projections (LPs) panel model based on data from 14 countries between January 1999 and December 2023. State dependence arises from the asymmetric effects of the El Niño–Southern Oscillation (ENSO), which alternates between El Niño and La Niña phases. The results reveal two dimensions of this asymmetry. First, the Phillips Curve is steeper during La Niña episodes, with inflation responding more strongly to unemployment gaps. Second, we find evidence of dynamic propagation: La Niña episodes produce stronger and more persistent inflationary effects than El Niño. These findings underscore the importance of incorporating ENSO‐related asymmetries into macroeconomic models.