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  4. May 2016
  5. The Phillips Curve: Back to the '60s?

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

The Phillips Curve: Back to the '60s?

  • Olivier Blanchard
American Economic Review
vol. 106, no. 5, May 2016
(pp. 31–34)
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Abstract

This paper reexamines the behavior of inflation and unemployment and reaches four conclusions: 1) The U.S. Phillips curve is alive and well (at least as well as in the past). 2) Inflation expectations however have become steadily more anchored. 3) The slope of the curve has substantially declined. But the decline dates back to the 1980s rather than to the crisis. 4) The standard error of the residual in the relation is large, especially in comparison to the low level of inflation. Each of the four conclusions presents challenges for the conduct of monetary policy.

Citation

Blanchard, Olivier. 2016. "The Phillips Curve: Back to the '60s?" American Economic Review, 106 (5): 31–34. DOI: 10.1257/aer.p20161003

Additional Materials

JEL Classification

  • E23 Macroeconomics: Production
  • E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
  • E31 Price Level; Inflation; Deflation
  • E52 Monetary Policy
  • E65 Studies of Particular Policy Episodes