| Sumario: | "The Slanted-L Phillips Curve" explores the relationship between inflation and labor market tightness, challenging the conventional wisdom of a linear Phillips curve. The authors argue that the surge in inflation during the 2020s caught forecasters and policymakers off guard, highlighting the nonlinearity of the Phillips curve. They provide evidence that periods of labor shortage lead to increased inflation, and present international evidence supporting the slanted-L Phillips curve. The article also introduces a graphical representation of the curve and a model that explains its shape, incorporating factors such as wage norms, labor demand, and production functions. References for further reading are provided.
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