Proposal to axe Phillips curve triggers controversy
“One cannot just ignore an equation,” retorts Olivier Blanchard
A proposal to cut out the Phillips curve from major macroeconomic models has triggered a heated debate among leading economists.
For several years now, economists have observed that the link between inflation and unemployment described by the Phillips curve has weakened. In many economies, the observed Phillips curve has become flatter, meaning inflation appears less responsive to changes in unemployment. That has led some to declare the curve “dead”.
Since the Phillips curve plays a central
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