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 are the potential consequences of a declining labor force participation rate on the economy?

In what ways could the Federal Reserve's approach to interest rates change based on inflation trends?