In Hooper, Mishkin and Sufi’s study, they find significant evidence of both negative slope and nonlinearity in the Phillips curve, meaning that the wage Phillips curve is very much alive. Following the study, as late as September 2019, the Fed still believed that the flattening of the Phillips curve (that is, price inflation becoming less sensitive to changes in resource slack in the previous twenty, thirty years) allows them to run the economy hot to give greater support for employment during economic downturns without incurring much cost to price stability.
I mean, inflation.
I mean, inflation.
I mean, inflation.
In Hooper, Mishkin and Sufi’s study, they find significant evidence of both negative slope and nonlinearity in the Phillips curve, meaning that the wage Phillips curve is very much alive. Following the study, as late as September 2019, the Fed still believed that the flattening of the Phillips curve (that is, price inflation becoming less sensitive to changes in resource slack in the previous twenty, thirty years) allows them to run the economy hot to give greater support for employment during economic downturns without incurring much cost to price stability.