"(Bloomberg) -- A fundamental relationship of mainstream economic theory at the heart of the Federal Reserve’s strategy for setting interest rates has been a poor guide for policy makers for at least three decades, according to a study by the Philadelphia Fed’s top-ranking economist.
The paper, co-authored by Philadelphia Fed Director of Research Michael Dotsey, shows that forecasting models based on the so-called Phillips curve, which asserts a link between unemployment and inflation, don’t actually help predict inflation."
[...]
“There may in fact be something wrong with the models, I don’t know, I think that continues to be a question that many economists are asking,”
Yeah, "I don't know", exactly.
It's time for mainstream (Keynesian) economists to get informed about the Austrian School of Economics.
--> http://www.vonmisesinstitute-europe.eu/austrian-economics/
Have a nice day!