Lucas and Sargent argue that the short-run trade-off between unemployment and inflation is caused by

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Lucas and Sargent, proponents of the rational expectations theory, argue that the short-run trade-off between unemployment and inflation, often represented by the Phillips curve, is primarily due to workers and firms being fooled by unexpected changes in monetary policy. They suggest that when the central bank changes monetary policy in an unanticipated way, it temporarily affects real variables like unemployment because people's expectations of inflation have not yet adjusted. This is a key insight of the New Classical economics.

Lucas and Sargent Argue That the Short-Run Trade-Off Between Unemployment