-
Fed's Williams says Phillips Curve linking inflation to employment is 'alive and kicking'
The relationship between employment and inflation known as the Phillips Curve is "alive and kicking," said New York Fed President John Williams on Friday. The Fed has traditionally been worried that low unemployment will lead to rising inflation. Because there have been no signs of inflation over the past few years, even though the unemployment rate has been so low, has led many economists to start to doubt this relationship, known by the "Phillips Curve" shorthand. In a speech at a forum on monetary policy, sponsored by the University of Chicago Booth School of Business, Williams said that the data shows the ... (full story)
-
Williams: Discussion of 'Prospects for Inflation in a High Pressure Economy: Is the Phillips Curve Dead or Is It Just Hibernating?'
The Phillips curve is the connective tissue between the Federal Reserve’s dual mandate goals of maximum employment and price stability. Despite regular declarations of its demise, the Phillips curve has endured. It is useful, both as an empirical basis for forecasting and for monetary policy analysis. The paper by Peter Hooper, Rick Mishkin, and Amir Sufi—HMS for short—provides an in-depth analysis of key aspects of inflation dynamics in the United States and how they may have changed. This study is particularly timely against the backdrop of an emerging consensus that the Phillips curve has become nearly flat. ... (full story)