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Phillips curve
(redirected from Phillips curves)

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Phillips curve

Graphic representation of the inverse relationship between the rate of unemployment and the rate of change in money wages. In 1958 A. W. Phillips plotted British unemployment rates and rates of change in money wages and found that when unemployment rates were low, employers were more likely to bid wages up to lure good employees away from their competitors. He claimed that this was a stable relationship. In the 1960s macroeconomists substituted the rate of price inflation for the rate of change in money wages and promulgated the curve as a tool of economic policy, arguing that the simultaneous achievement of low unemployment and low inflation was problematic. Monetarists, including Milton Friedman, claimed the relationship was not stable.
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Also, the NKPC implies that inflation depends on real marginal cost, and not directly on either the gap between actual output and potential output or the deviation of the current unemployment rate from the natural rate of unemployment, as is typical in traditional Phillips curves (Walsh 2003).
The New Keynesian Phillips Curve and lagged inflation: a case of ... by Hall, Stephen G.; Hondroyiannis, George; Swamy, P.A.V.B.; Tavlas, G.S. / Southern Economic Journal
Phillips curves, expectations of inflation and optimal employment over time.
The applicability of the short-run Phillips curve to Namibia by Ogbokor, Cyril A. / Journal of Social Sciences
Sticky information yields the empirically-observed long lags of response of income to changes in monetary policy (Friedman (1948) and Romer and Romer (1989)); it is consistent with the surprisingly slow response of inflation to shocks found in estimates of Phillips Curves (Gordon (1997)); and it fails to yield the theoretical perversity in rational expectatio ns staggered contract models of deflationary policies that lead to increases, not decreases in output (Ball (1994)).
Behavioral macroeconomics and macroeconomic behavior by Akerlof, George A. / American Economist
 
 
 
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