In this paper we test a new empirical relationship between wage and inflation. We introduce the concept of a cumulative wage gap, meaning the cumulative gap between the current wage and a maximum peak wage value in the past. In a crisis, people relate to their peak gains in the immediate past....

With inflation lodged below the Federal Reserve target rate and as unemployment rates continued to fall, central banks and economists took the view that the Phillips theory had failed. By reviewing the writings of William Phillips and his predecessors (Classical Phillips), this study...