Inflation Reduces Unemployment: Central Banks Can Boost Growth Short-Term
The Phillips Curve theory suggests that when prices go up, unemployment goes down. This idea has been tested many times using math, but never with real people's behavior. In this study, researchers used a simple model to see how inflation affects jobs. They found that when prices rise, unemployment drops in the short term. This means that when central banks make money more available, it can help create jobs quickly, but it also has some negative effects on how money is shared.