An article on brookings.edu noted that in recent years, a tight labor market hasnt led to a
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An article on brookings.edu noted that in recent years, “a tight labor market hasn’t led to a pickup in inflation. . . . This phenomenon is often referred to as the flattening of the Phillips curve.”
a. What do the authors mean by a “tight labor market”?
b. Why does a failure of the inflation rate to increase despite a tight labor market indicate that the Phillips curve is flattening?
c. What would we expect to happen to inflation when the labor market is tight if the Phillips curve were steep rather than flat?
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