The second is that the recent relationship between unemployment and wage, or price, inflation, commonly known as the Phillips curve, Chapter 8, has not yet shown any tendency for wage rates to rise as unemployment falls, in a large number of advanced economies. Indeed, unemployment has declined in many of our countries to the kind of levels that would have probably generated wage inflation in the last century, but there is as yet little sign of any resultant upsurge in wages. The Phillips curve has recently seemed flat, i.e. as unemployment falls, nominal wage growth remains more or less
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