The Phillips curve has been the decisive moving part in the central bankers' theory of the inflation process. It's not just central bankers. Just as stagflation was gutting Keynesianism, the 1970s rational expectations revolution established the supremacy of the accelerationist Phillips curve in economists' minds. Modern macroeconomics went all in on a variant wedded to a national frame of reference. Even though it has been shown that global slack has replaced domestic slack as the effective Phillips curve for the US economy, the Fed has been holding fast to its model of the inflation process as it perfects rudderless central banking.
Obituary: Phillips Curve
Obituary: Phillips Curve
Obituary: Phillips Curve
The Phillips curve has been the decisive moving part in the central bankers' theory of the inflation process. It's not just central bankers. Just as stagflation was gutting Keynesianism, the 1970s rational expectations revolution established the supremacy of the accelerationist Phillips curve in economists' minds. Modern macroeconomics went all in on a variant wedded to a national frame of reference. Even though it has been shown that global slack has replaced domestic slack as the effective Phillips curve for the US economy, the Fed has been holding fast to its model of the inflation process as it perfects rudderless central banking.