Understanding inflation and the implications for monetary policy: a Phillips curve retrospective

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, policy makers and financial correspondents use Phillips curve concepts in discussing the influence of demand growth on inflation, as well as the relationship between unemployment, wages and prices. But the Phillips curve of today is not that of fifty years ago. And the economy and our understanding of price setting behavior, the determinants of inflation and the role of monetary policy have all evolved considerably over that period. ; This conference gathered economists, policy makers and representatives of industry, labor and financial institutions to re-examine the theoretical and empirical validity of the Phillips curve in its recent specifications and to consider what the Phillips curve has taught us about how the economy works. What have economists learned about price and wage setting and inflation expectations that would improve the way we formulate and use the Phillips curve? In turn, what have we learned from the Phillips curve approach about inflation? How can we apply these lessons to improve the conduct of monetary policy?