Paul Krugman

@paulkrugman ↗

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Last Checked Oct. 8, 2022

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Sat Sep 03 13:35:08 +0000 2022

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Paul Krugman @paulkrugman

There is some level of u — call it u* — for which f(u)=0. One way or another, u* (which can change over time!) is highly significant. But exactly how it's significant depends on what determines expectations 3/ — PolitiTweet.org

Posted Sept. 3, 2022

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Paul Krugman @paulkrugman

Ever since Friedman and Phelps wrote their seminal papers on inflation and unemployment in the 60s, most practicing macroeconomists have worked with a model that looks something like this: Core inflation = f(u) + Expected inflation where u is the unemployment rate 2/ — PolitiTweet.org

Posted Sept. 3, 2022

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Paul Krugman @paulkrugman

In the 60s and 70s it seemed reasonable to assume that expected inflation was equal to recent past inflation — in fact, the previous year's inflation looked like a pretty good proxy. So the Phillips curve could be rearranged to Change in inflation = f(u) 4/ — PolitiTweet.org

Posted Sept. 3, 2022