Why Is Inflation Low Globally?

Oscar Jorda, Chitra Marti, Fernanda Nechio and Eric Tallman

FRBSF Economic Letter, 2019

Abstract: A hot economy eventually boosts inflation. Such is the simple wisdom of the Phillips curve. Yet inflation across developed countries has been remarkably weak since the 2008 global financial crisis, even though unemployment rates are near historical lows. What is behind this recent disconnect between inflation and unemployment? Contrasting the experiences of developed and developing economies before and after the financial crisis shows that broader factors than monetary policy are at play. Inflation has declined globally, and this trend preceded the financial crisis.

Date: 2019
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