Maybe It’s Not LTI

via The Phillips curve may be broken for good – Daily chart

The link is to an article in The Economist. I’m not an economist, but frequently read economic news. It sounds like practicing economists tend to assume their relationships are linear time-invariant (LTI) and come from data with high signal to noise ratios. I have a really hard time believing that would be the case. I’m guessing the Philips curve is not broken, it’s just non-linear, time varying and difficult to parameterize with much certainty due to noisy data. Kind of like EAF power system models and measurements…..

 

 

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