Inflation’s New Roots: a Breakdown of the Phillips Curve

This article is relevant to macroeconomic theory. We know that the Phillips curve does break down when aggregate demand outgrows aggregate supply and so it is very feasible that it may not apply at other times. The theory that other factors such as input prices are a more determinant factor of inflation does apply as it makes a direct correlation just like the Phillips curve. Although the Phillips curve does not hold in the long run, and in the short run has been having less of a relationship, it still holds in theory. If unemployment increases, there will be less production and output which will create a new equilibrium. Prices will decrease, lowering inflation, and upholding the relationship between inflation and unemployment. But, fact of the matter is that competition over recent years in all markets and input price fluctuations along with the complimentary establishment and establishment of monopolies seem to show more evidence of impacting inflation in recent years. In light of the fact that competition and input prices effect inflation so drastically, I would suggest that the government create competition in all industries, eliminate any monopolies, and try to keep input prices at a minimum in any way possible. This will ensure lower price levels, and lower inflation.