Intermediate Macroeconomics Lecture 10
Intermediate Macroeconomics Lecture 10
Inflation, Unemployment, and the Phillips curve a Phillips Curve: relationship between inflation and unemployment A W. Phillips(1958)The relationship between unemployment and the rate of change of money wages in the united kingdom 1861 1957. Economica 25
Inflation, Unemployment, and the Phillips Curve ◼ Phillips Curve: relationship between inflation and unemployment A.W.Phillips (1958) “The relationship between unemployment and the rate of change of money wages in the united kingdom, 1861- 1957,” Economica 25
Inflation, Unemployment, and the Phillips Curve 1861-1913 Original Phillips Curve =-8(-
Inflation, Unemployment, and the Phillips Curve ◼ 1861-1913 Original Phillips Curve ( *) w g u u = − − w g u
Inflation, Unemployment, and the Phillips Curve Inflation rate and unemployment rate in the U.S. after 1961 80.81 75 7 71 69 72 76 82.83 61 u
Inflation, Unemployment, and the Phillips Curve ◼ Inflation rate and unemployment rate in the U.S. after 1961 61 69 71 72 73 74 75 76 79 80,81 82,83 84 86 89 92 97 u
Phillips curve Inflation rate depends on ① Expected inflation 2 The deviation of unemployment from the natural rate(cyclical unemployment 3 Supply shocks 丌=x2-B(-")+E
Phillips Curve ◼ Inflation rate depends on ① Expected inflation ② The deviation of unemployment from the natural rate (cyclical unemployment) ③ Supply shocks = − ( − ) + e n