There is no Phillips Curve-breakdown puzzle in the behavior of infaltion over the past decade once one recognizes that (a) the employment-to-population ratio and not the unemployment rate is the right measure of how bad the job market is, and (b) that people have been—I think largely because of misinformation from the press—thinking that inflation is higher than it in fact is: Laurence M. Ball and Sandeep Mazumder: The Nonpuzzling Behavior of Median Inflation: "Inflation behavior is easier to understand if we divide headline inflation into core and transitory components, and if core inflation is measured by the weighted median of industry inflation rates... [that] filters out large price changes in all industries. We illustrate the usefulness of the weighted median with a case study of inflation in 2017 and early 2018. We also show that a Phillips curve relating the weighted median to unemployment appears clearly in the data for 1985-2017, with no sign of a breakdown in 2008...
#noted
