Phelps Says Standard Theory Doesn't Explain Low Inflation

The video explores the relationship between low unemployment rates and the lack of inflation, challenging standard economic theories. It suggests that workers' experiences during the financial crisis have led to reduced wage demands, while businesses face competition and productivity concerns. These factors contribute to the current economic situation, where high demand does not lead to expected inflation.

What are the humanistic forces mentioned that influence economic data?

Discuss the relationship between low unemployment rates and inflation as presented in the text.

How has the financial crisis affected workers' expectations regarding wage increases?

What concerns do firms have that might prevent them from giving wage increases?

What is the significance of productivity growth in the context of wage increases?