The Phillips Curve Myth

Source: Cobden Center
by Dr. Frank Shostak

“According to a popular way of thinking, the central bank can influence the rate of economic expansion by means of monetary policy. It is also held that this influence carries a price, which manifests itself in terms of inflation. For instance, if the goal is to reach faster economic growth and a lower unemployment rate then citizens should be ready to pay a price for this in terms of a higher inflation rate. Note that inflation is defined by a popular way of thinking as increases in the prices of goods and services. It is held that there is a trade-off between inflation and unemployment, which is described by the Phillips curve.” (07/14/21)