Philips curve BY William Philips .

Inflation unemployment Relation between unemployment and inflation .

Generalization for philips curve Short run trade off between inflation and rate of unemployment Effects of aggregate supply shocks Long run philips curve .

1958 philips curve Conclusion from philips curve Reasons of inverse relationship between inflation and unemployment .

Two American Economist published an article in American Economic Review where they fit Phillips Curve to the US Economy from 19351959 ‡They used American data instead of British data. ‡They measured price inflation rates instead of wage Inflation rates. .

S from year 1961-1987 1980-1992 1961-1969 .1970 -1980 Analysis of philips curve 1976-79 Data of U.

2nd generalization Stag inflation Supply shock Negative supply supply shocks Positive supply shocks .

Supply shock .

Application of philips curve conclusion .

Shift of philips curve Due to Change in expected rate of inflation .

Shift of philips curve Due to Change in natural rate of unemployment .

Friedman point of view Temporary trade off between unemployment and rate of inflation Short run philips curve Long run philips curve .

Short run philips curve 6 6 3 .

Long run Philips curve .

Sign up to vote on this title
UsefulNot useful