Phillips curve is flattening
A new paper from the Reserve Bank of Australia finds that the Phillips curve, which measures the relationship between unemployment and inflation, has flattened in recent years.
Using data for the US and Australia, the research shows that the curve has flattened as firms are less inclined to raise their prices now than in the past. The explanation for this might be that globalisation and/or the improved conduct of monetary policy has altered price-setting behaviour.
Click here to read the paper.
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