Inflation Theories and Economic Policy

This chapter delves into the evolution of inflation theories, particularly the Phillips Curve, and their historical implications for economic policy. It traces the relationship between unemployment and inflation while discussing specific historical contexts, such as the 1960s under Lyndon Johnson and the drastic measures taken by Paul Volcker in the 1980s. The chapter highlights the balancing act between managing unemployment and inflation, especially in light of recent events like the 2008 financial crisis and responses to the COVID-19 pandemic.