Explaining apparent changes in the Phillips curve: the Great Moderation and monetary policy

Charles Carlstrom and Timothy Fuerst

Economic Commentary, 2008, issue Feb

Abstract: Observations that the Phillips curve may be deviating from historical norms are important to policymakers because deviations would imply that more or less output has to be sacrificed to achieve a permanent reduction in long-term inflation. But we argue that recent economic shocks and a shift in the Fed?s response to inflation may be leading economists to misestimate the curve.

Keywords: Phillips curve; Inflation (Finance); Monetary policy (search for similar items in EconPapers)
Date: 2008
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