Abstract
The recent weakening of the inflation-unemployment tradeoff has instigated a debate on whether the New Keynesian framework has outlived its usefulness. Understanding the source of that structural change is crucial for proper monetary policy conduction. I estimate the inflation-unemployment tradeoff using newly assembled data on wages and unemployment rates for 17 advanced economies since 1870. I show that the wage Phillips curve has always been ``alive and well despite displaying a time-varying slope. Using the Phillips multiplier framework, I show that the tradeoff becomes weaker in low price inflation environments due to a muted wage inflation response to monetary policy.
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