The Phillips curve suggests rising wages from low unemployment may increase inflation temporarily. High inflation may prompt Fed rate hikes, raising borrowing costs and wage demands. Despite ...

Price rigidity is a key mechanism through which monetary policy is thought to affect the economy. When some prices are hard to change, firms may respond to a monetary impetus by changing instead their ...

It is conventional wisdom that the reduced form Phillips curve has become flatter in recent decades. Accordingly, we show that the statistical relationship between changes in U.S. inflation and ...