Inattention helps explain flat Phillips curve – Fed paper

Fed note

Inattentive households appear to be a major factor behind the recent flattening of the Phillips curve, according to a working paper published by the Federal Reserve.

Damjan Pfajfar and John Roberts test two possible explanations for the reduced responsiveness of inflation to changes in macroeconomic conditions. One possibility is that prices are stickier, in the sense that firms adjust them less often, while the other is that people are not really paying attention to the macroeconomy, and so do

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