Phillips curve differs depending on labour market – Fed study
Research finds curve to be flat in normal markets and steep in tight ones
Policy-makers face different Phillips curve trade-offs in tight and normal labour markets, say researchers with the Federal Reserve Board.
In a note published on September 4, Simon Smith, Allan Timmermann and Jonathan Wright say the curve has flattened since 2000 in normal labour markets and has been steep in tight ones.
The Phillips curve describes the relationship between inflation and unemployment. It has traditionally posited that as one falls, the other rises.
The authors say their results
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