(February 24, 2018 09:34 PM, by Scott Sumner) David Beckworth has an excellent post discussing the Fed's confused relationship with the Phillips Curve. Recall that the Fed has the Keynesian interpretation of the Phillips Curve---which basically says that rising inflation is caused by an overheating economy. Or more... (0 COMMENTS)
I touched on this issue over at Econlog, but I’ll try again here in slightly a different way. The original Phillips Curve from 1958 had nominal wage inflation on the vertical axis. (Actually the original original PC was developed by Irving Fisher in the 1920s, and used price inflation.) Then American economists switched to price […]
American central bankers and economists aren’t alone in their Phillips Curve nightmare. They are joined by others practically everywhere else around the world. In Europe, for example, the unemployment rate there continues to fall while inflation keeps on misbehaving in its meandering. Show More Summary
Has the Phillips curve vanished ? There is widespread discussion of the possibility that the Phillips curve has become horizontal. I am old enough to remember when all serious economists agreed that, in the long run, it is vertical. The reason for the thought that it might be horizontal is that large important countries have […]
What happened to the European Phillips Curve ? Recently many have argued that the Phillips curve has become the Phillips horizontal line. I am old enough to remember when the hot new idea in macroeconomics was that the long run Phillips curve is vertical so inflation varies but unemployment stays near the natural rate and […]
IT HAS long been assumed that economic policymakers face a trade-off between unemployment and inflation.
The Phillips Curve is broken and is used by policy-makers to hurt workers. Can it be fixed?
(October 19, 2017 03:22 PM, by Scott Sumner) Over at TheMoneyIllusion I have a new post that (among other things) discusses this claim: Blanchard was prompted to recite his faith in the power of the Phillips Curve by former Fed governor Jeremy Stein, who wondered how central banks... (2 COMMENTS)
The lack of response of US core inflation to a tightening labour market in recent years echoes experience in the first half of the 1960s. Then, core inflation embarked on a sustained rise only after the unemployment rate fell below 4.5% and then 4% in 1965-66. Show More Summary
Today, US Unit Labor Costs Nonfarm Business Sector QoQ % SAAR was reported for Q2 FINAL. It declined 0.2% from 0.6% in Q1. Aren’t we in a supposed tight labor market when wages (and labor costs) should be rising? The post Unit LaborShow More Summary
In the past, the relationship between inflation and unemployment had been defined popularly by the Phillips Curve. However, this no longer seems to hold water under our current economy.
Authored by Mike Shedlock via MishTalk.com, The Phillips Curve, an economic model developed by A. W. Phillips purports that inflation and unemployment have a stable and inverse relationship. This has been a fundamental guiding economic...Show More Summary
``A fundamental relationship of mainstream economic theory at the heart of the Federal Reserve's strategy for setting interest rates has been a poor guide for policy makers for at least three decades, according to a study by the Philadelphia Fed's top-ranking economist. Show More Summary
Janet Yellen, “Super” Mario Draghi and other Central Bankers are meeting at the 2017 Economic Policy Symposium on “ The post Jackson Hole: Inflation, Phillips Curve, Income Inequality, Housing and The Taylor Rule was originally published at The Wall Street Examiner. Follow the money!
Cue the latest economic (and Phillips curve) paradox. On one hand, the US unemployment rate is at a 16 year low of 4.4%, suggesting little if any slack in the US economy, and according to anecdotes from both the Fed's Beige Book andShow More Summary
The post Nonlinearities in the Phillips Curve for the United States: Evidence Using Metropolitan Data appeared first on The Big Picture.
It’s widely agreed that the Phillips curve is flat, that low unemployment is not stoking up wage inflation – though perhaps this has been true for longer than thought. This poses the question: what are the policy implications of this?...
Authored by Lakshman Achuthan via BusinessCycle.com, Under Ms. Yellen’s leadership, the preemption of inflation based on the Phillips curve has become the lodestar of monetary policy. Accordingly, last week’s Fed statement, while allowing...Show More Summary
The past decade has seen a growing role for global slack in Phillips curve approaches, as opposed to the traditional focus on domestic slack. This column explores whether augmenting Phillips curves by measures of foreign slack can help to better explain past developments in underlying inflation. Show More Summary
Sorry. It suddenly came to me this morning: a simple (and now blindingly obvious) way to reconcile an apparent contradiction in my own thoughts. As a lot of people in different countries have noticed, the observed Phillips Curve now looks...