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Credit Suisse: The Death Of The Phillips Curve Has Been Greatly Exaggerated
Over the past 12 or so months, we've spilled gallons upon gallons of digital ink in these not-at-all-hallowed pages expounding on the Phillips curve.
A couple of years back, this normally wonkish topic crawled out of your dusty Econ textbook, took an axe to the doors of mainstream financial media outlets (Jack Torrance style) and became an unlikely headline-grabber as policymakers the world over struggled to explain an apparent breakdown in one of economics' most fundamental relations
Phillips Curve, CAPM, EMH, Natural Rate of Unemployment, Neutral Rate. All useful academic concepts. All useless to apply in a policy making framework. If the Phillips Curve is unstable over time, what possible use is it for a policymaker? Not much. Same as the neutral rate of interest. The problem is not the theory it is the misguided application of it.