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Federal Reserve Bank of Cleveland
Economic Commentary
Explaining apparent changes in the Phillips curve: the Great Moderation and monetary policy
Charles T. Carlstrom
Timothy S. Fuerst
Abstract

Observations that the Phillips curve may be deviating from historical norms are important to policymakers because deviations would imply that more or less output has to be sacrificed to achieve a permanent reduction in long-term inflation. But we argue that recent economic shocks and a shift in the Fed’s response to inflation may be leading economists to misestimate the curve.


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Charles T. Carlstrom & Timothy S. Fuerst, "Explaining apparent changes in the Phillips curve: the Great Moderation and monetary policy" , Federal Reserve Bank of Cleveland, Economic Commentary, issue Feb, 2008.
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Keywords: Phillips curve ; Monetary policy ; Inflation (Finance)
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