Is economists' favorite tool to crush inflation broken?
8 September 2023 - 23 mins
Podcast Series
Planet Money
When economists and policymakers talk about getting inflation under control, there's an assumption they often make: bringing inflation down will probably result in some degree of layoffs and job loss. But that is not the way things have played out since inflation spiked last year. Instead, so far, inflation has come down, and unemployment has stayed low.
So where does the idea of this tradeoff – between inflation and unemployment – come from?
That story starts in the 1940s, with a soft-spoken electrical engineer-turned-crocodile hunter-turned-economist named Bill Phillips. Phillips was consumed by the notion that there are underlying forces at work in the economy. He thought that if macro...
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