Phillips curve

Almost all markets have slack: idle or unemployed workers, unsold goods, empty rooms or seats. This book develops a theory of economic slack and explores how it shapes markets, business cycles, and policies.

This paper builds a Beveridgean model of the Phillips curve. Prices respond to slack so the divine coincidence holds: prices are stable at full employment. The Phillips curve is kinked if wage cuts are more costly to producers than price hikes.

This paper develops a model of pricing in which buyers care about the fairness of markups but misinfer them from prices. The model yields price rigidity, generates realistic Phillips curves, and explains why people dislike inflation so much.