Economists and leaders on both sides of the aisle are debating if the Phillips curve, a theory which says that unemployment and inflation have an inverse relationship, applies to the US economy.
When questioned by Rep. Alexandria Ocasio-Cortez, Federal Reserve Chairman Jerome Powell said at a congressional hearing that estimates of the lowest sustainable unemployment rate have been too high.
Larry Kudlow, the top economic advisor to President Trump, has also ditched the Phillips curve.
on Markets Insider.
Both liberals and conservatives are questioning just how important the relationship between inflation and unemployment actually is, and what it could mean for monetary policy moving forward.
On Thursday, Larry Kudlow, President Donald Trump’s top economic advisor, told Fox News he gives Alexandria Ocasio-Cortez “high marks” for her questions on the issue to Federal Reserve Chairman Jerome Powell.
During a congressional hearing Wednesday, Rep. Alexandria Ocasio-Cortez, the New York Democrat, presented Powell with a line of questions about the Phillips curve, a theory which says that unemployment and inflation have an inverse relationship. She asked the Fed chair if it is possible that its estimates of the lowest sustainable unemployment rate may be too high.
Powell’s response? “Absolutely,” …read more
Source:: Businessinsider – Politics