In this paper we test a new empirical relationship between wage and inflation. We introduce the concept of a cumulative wage gap, meaning the cumulative gap between the current wage and a maximum peak wage value in the past. In a crisis, people relate to their peak gains in the immediate past....

1. The Phillips Curve: what went wrong -- 2. An alternative theory of consumption -- 3. The post-crisis Phillips Curve: cumulative wage gap vs. inflation gap -- 4. Empirical evidence -- 5. Policy implications.