Must-Read: Olivier Blanchard, Eugenio Cerutti, and Lawrence Summers: Inflation and Activity–Two Explorations and their Monetary Policy Implications: “Since the mid-1970s, short-run inflation expectations have become more stable…

…(λ has increased), and… the slope of the Phillips curve (θ) has flattened over time, with nearly all of the decline taking place from the mid-1970s to the early 1990s…. For most countries, the coefficient θ today is not only small, but also statistically insignificant…

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