From as to the philips curve .AS: Y=Y+a(P-pe P=P+-(Y-) P-P1=P-P1+-(Y-Y) x=x+-(Y-Y) Phillips Curve -B-4)+8
From AS to the Phillips Curve ◼ AS: ◼ Phillips Curve: ( ) e Y = Y+ P − P − ( ) 1 − P = P + Y −Y e ( ) 1 1 1 − P − P− = P − P− + Y −Y e ( ) 1 − = + Y −Y e = − ( − ) + e n
Expectations and Inflation Inertia 丌=1-B(1)+E Why is our money ever less valuable? Perhaps it is simply that we have inflation because we expect inflation, and we expect inflation because we had it Robert solow
Expectations and Inflation Inertia “Why is our money ever less valuable? Perhaps it is simply that we have inflation because we expect inflation, and we expect inflation because we had it.” Robert Solow = −1 e = − − + − ( ) 1 n