The Phillips Curve, which shows the relationship between inflation and unemployment, is not working as it used to. Inflation is not responding much to cost pressures, leading to a flat supply curve. This disconnect is mainly due to inflation not increasing when costs go up. Changes in inflation stabilization policies may also be reducing the impact of demand changes on the economy. The evidence suggests that changes in the labor market structure or how we measure its tightness are not the main reasons for this disconnect.