Resolving the Missing Deflation and Inflation Puzzles

The alleged breakdown of the Phillips curve has left monetary policy researchers and central bankers wondering if we need to develop completely new models for price and wage determination. This column argues that a relatively small alteration of the standard New Keynesian model, combined with using the nonlinear instead of the linearised solution, is sufficient to resolve the two puzzles – the ‘missing deflation’ during the recession and the ‘missing inflation’ during the recovery – underlying the supposed breakdown.

12. November 2019

Authors Jesper Lindé Mathias Trabandt

Whom to contact

For Researchers

Professor Dr Mathias Trabandt
Professor Dr Mathias Trabandt
Economist

If you have any further questions please contact me.

Request per E-Mail

For Journalists

Mitglied der Leibniz-Gemeinschaft LogoTotal-Equality-LogoWeltoffen Logo