Friday, April 8, 2011

The Shifting Phillips Curve

There is an interesting post on Noahpinion blog about the shifting, short run Phillips curve. 

My comment: Since the present position of the curve is in the low inflation range it is a good time to have some inflation, in order to accelerate the pick up of growth and the reduction of unemployment without incurring too much inflationary risk. Indeed the low inflation-high unemployment mix for 2010 (not represented on the chart) is situated on the right extremity of the lowest curve. Thus a little bit more of inflation should buy a significant increase in employment.

Here is the chart:

And the complete post is here.

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