Does inflation have any benefits? Some Keynesian macroeconomists once believed that higher inflation could “buy” a permanent reduction in the unemployment rate, a belief that was encapsulated in early versions of the “Phillips curve.” Economists now agree that no such exploitable trade-off exists; it seemed to exist in the 1960s only when higher inflation was a surprise. Surprise inflation can reduce layoffs (by making dollar sales unexpectedly high) and shorten job search (by making dollar wage offers unexpectedly high), lowering the unemployment rate below its “natural rate.” When workers come to expect a high inflation rate, as they did in the 1970s, unemployment returns to its “natural rate” (see phillips curve). By the same logic, a surprise reduction in inflation can raise unemployment above its natural rate, making disinflation costly.