Archive for the ‘Full Employment’ Category

The Phillips Curve is at best in ill repair, if not just outright broken.

August 23rd, 2015

Here’s an excellent piece by Ben Leubsdorf on how the Phillip’s curve–long a workhorse of macro-policy–is not much help these days in trying to quantify the relationship between slack and inflation. From the piece: In an influential 1958 paper, [A. W. Phillips (a Kiwi, btw!–JB)]  hypothesized that employers will bid up wages when workers are scarce,… Read more

The job market is improving, but low labor force participation is still holding us back

August 11th, 2015

Something odd is happening in the U.S. job market. The rate of unemployment is falling, and doing so pretty quickly (see first figure), to levels approaching the Federal Reserve’s estimate of full employment. That is, the Fed says full employment corresponds to a jobless rate of 5.1 percent and the unemployment rate last month clocked… Read more