Inflation, Unemployment and the Phillips Curve

The Phillips Curve says that “when unemployment is low, inflation is high, and vice-versa.”  And the Federal reserve still makes decisions based on this construct.  What does the empirical evidence tell us about the existing relationship between unemployment and inflation? What are the policy implications?  And what’s likely to happen to monetary policy and inflation as a result?  We’ll show you.   

In 1958, economist A.W. Phillips observed a century-long inverse relationship b.....