In October 2018, St. Louis Fed President James Bullard claimed his organization had killed the work of ancient economist AW Phillips. It was the latter who has had his name, voluntary or not, attached to the eponymous curve at the center of this and seemingly every modern Economics mystery. And a big one was brewing in ’18.
The unemployment rate was falling and by official accounts the economy was doing better than well. Sliding those views into the Phillips Curve, policymakers at the Fed worried inflation was at risk of heating up. After all, at heart the curve posits a relationship between employment and price changes.
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