In yet another example of unconventional Federal Reserve policy, Fed officials invited Pope Francis to their DC headquarters today to offer a papal blessing to their beleaguered workhorse, the Phillips Curve.
Though the curve has historically provided the Fed guidance as to the relationship between unemployment and inflation, in recent years, it has demonstrably failed to do so, leaving macroeconomics with no clear theory or understanding of the inflation-generating process.
“We’ve tried everything else–anchored models, moving coefficients–but we’re stuck,” said Fed chair Janet Yellen. “Why not see if his Holiness can give the Phillips Curve the blessing it needs to start working again?”
Though papal authorities would not say whether the pope would take up the Fed’s request, they did point out that the pontiff’s NAIRU–the unemployment rate he believes to be consistent with stable prices–is “way below that of both mainstream economists and prior popes.”