Professor Auerbach: Surprised Inflation Hasn't Picked Up

The transcript discusses the ongoing debate about the relevance of the Phillips Curve, particularly in the context of inflation and job market data. It highlights the surprising lack of inflation despite labor shortages and explores potential reasons, such as low productivity growth and labor force participation rates. The discussion also covers the Federal Reserve's monetary policy, including the reduction of its balance sheet and interest rate hikes, and the differing opinions within the Open Market Committee on how to proceed.

What is the main reason economists are hesitant to dismiss the Phillips curve?

• The consistent increase in compensation across sectors.

• The lack of labor shortages in the market.

• The unexpected rise in inflation rates.

• The strong correlation between inflation and unemployment.

How did the Great Recession affect labor force participation?

• It had no impact on labor force participation.

• It caused a significant increase in labor force participation.

• It led to a sharp decline in labor force participation.

• It resulted in a temporary increase in labor force participation.

What is one reason for slower wage growth mentioned in the transcript?

• Increased labor force participation.

• High productivity growth.

• Rapid inflation.

• Low productivity growth.

What is the consensus regarding the Federal Reserve's rate hikes this year?

• There should be only one rate hike.

• There should be no rate hikes.

• There should be five rate hikes.

• There should be at least three rate hikes.

What is a potential consequence of the Fed reducing its balance sheet?

• It will result in a decrease in interest rates.

• It will have no impact on the economy.

• It will lead to immediate inflation.

• It is considered a form of tightening by bond market people.