What's Happened to the Phillips Curve?

An often-asked question, these days. Unemployment is really low, so where's the inflation?

Makes me tend to doubt the reported numbers. But I don't have anything on that.

It happened before, the "where's the inflation?" thing. I found something on that:

What's Happened to the Phillips Curve?

Flint Brayton, John M. Roberts, and John C. Williams
Division of Research and Statistics
Federal Reserve Board
Washington, D.C. 20551
September 1999

From the abstract:

Two alternative modifications to the standard Phillips curve restore stability. One replaces the unemployment rate with capacity utilization. Although this change leads to more accurate inflation predictions in the recent period, the predictive ability of the utilization rate is not superior to that of the unemployment rate for the 1955 to 1998 sample as a whole. The second, and preferred, modification augments the standard Phillips curve to include an “error-correction” mechanism involving the markup of prices over trend unit labor costs. With the markup relatively high through much of the 1990s, this channel is estimated to have held down inflation over this period, and thus provides an explanation of the recent low inflation.