IT HAS long been assumed that economic policymakers face a trade-off between unemployment and inflation. Let unemployment fall below its “natural” rate (the level of joblessness that results merely from the normal patterns of job gains and losses at any one time) and the economy could overheat, causing inflation to spiral out of control. The Federal Reserve chair, Janet Yellen, alluded to this relationship in a speech in September when she warned that, left unchecked, America's healthy job growth could create an “inflationary problem down the road”.

But a growing number of economists now say that the trade-off, known as the Phillips curve after an economist who described it in a 1958 paper, no longer holds[....]