The author's comments focus on how the lessons from recent research on the Phillips curve are helping him think about the influence of fluctuations in the prices of commodities, such as oil, on the outlook for inflation and the appropriate policy responses to such developments.

It has been fifty years since A.W. Phillips published the famous article on inflation and unemployment that established the Phillips curve as a central concept in macroeconomic analysis and policymaking. Today, despite ongoing debate about the validity of this approach, many academic economists,...

As with many important theories, the long run value of Phillips curve theories may lie in the new flames that are emerging from its dying embers.

Historical experience suggests an important role for some deviation from the most restricted form of rational expectations in inflation dynamics, but also shows that other aspects of sluggish price adjustment – such as nominal rigidities, are important; and the available indicators of...

The author discusses: the challenges the wealth of micro-data has posed to macroeconomists and some of the progress made to address these; the fact that an important number of price changes in the data are temporary discounts (sales); and the complicated mapping from the frequency of price...

Gali and Gertler (1999) are the first to find that the baseline sticky price model fits the U.S. data well. I examine the robustness of their estimates along two dimensions. First, I show that their IV estimates are not robust to an alternative normalization of the moment condition being...

One of the criticisms routinely advanced against models of the business cycle with staggered contracts is their inability to generate inflation persistence. This paper finds that staggered Taylor contracts are, in fact, capable of reproducing the inflation persistence implied by U.S. data....

Observations that the Phillips curve may be deviating from historical norms are important to policymakers because deviations would imply that more or less output has to be sacrificed to achieve a permanent reduction in long-term inflation. But we argue that recent economic shocks and a shift in...