Phillips Curve

The Phillips Curve The short run Phillips Curve shows the relationship between inflation and unemployment. Developed by New Zealand economist A. H. W. Phillips

Unemployment and Inflation: The Phillips Curve

Aggregate Supply and the Phillips Curve Both SRAS and PC show the relationship between the change in unemployment and inflation The PC shows the relationship between the level of unemployment and the inflation rate.

Phillips Curve and Inflation Inflation can shift the Phillips curve. How? The inflation that can shift the PC is the expected rate of inflation. Based on the theories of Milton Friedman and Edmund Phelps that expectations about future inflation affects current inflation

Expected Inflation and the Short-Run Phillips Curve

Long Run Phillips Curve The LRPC is actually derived from, and related to, the nonaccelerating inflation rate of unemployment (NAIRU) NAIRU is the unemployment rate at which inflation does not change over time (it matches expectations, in other words.) LRPC is the line where, if unemployment drops, inflation accelerates, and vice versa.

The NAIRU and the Long-Run Phillips Curve