During the economic expansion of the 1990s, the United States enjoyed both low inflation rates and low levels of … unemployment. Juhn, Murphy, and Topel (2002) point out that the low unemployment rates for men in the 1990s were accompanied by … historically high rates of non-employment suggesting that the 1990s economy was not as strong as the unemployment rate might …

This paper presents a theory of the backward-bending Phillips curve. There is a minimum unemployment rate of inflation … which offers a policy alternative to the non-accelerating inflation rate of unemployment. Nominal wages are downwardly rigid … effected by increases in the general price level, a variable outside individual firms' control. This is why inflation 'greases …