BoE research identifies strong impact from long-term unemployment on inflation
Long-term unemployment may have greater impact than recent research has implied
Research published today by the Bank of England (BoE) has found statistical models used in recent literature may be underestimating the degree to which long-term unemployment impacts inflation.
Author Bradley Speigner challenges the use of linear Phillips curves when modelling wage inflation. In the working paper Long-term unemployment and convexity in the Phillips curve, he argues the data may imply a flat ‘curve' even if the reality is different.
"The intuition is simple; by the time the long
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