Phillips curve flatter when inflation is low – researchers
Downward wage and price rigidities cause non-linearity in Phillips curve, says Peterson Institute paper
The Phillips curve may be flatter when inflation is low and output is below potential, a paper published by the Peterson Institute for International Economics finds.
The Phillips curve states that a strengthening economy is associated with an increase in inflation. Kristin Forbes, Joseph Gagnon and Christopher Collins examine this relationship across 31 countries from 1996 to 2017.
They find that if inflation is running below 3% and there is spare capacity in the economy, the relationship
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