Phillips Curve

THE PHILLIPS CURVE INTRODUCTION TO PHILLIPS CURVE The Phillips write out named is after Prof. A.W.Phillips, (1914-75), a New Zealand economist working in the London schoolhouse of Economists in the 50s. He published a paper in 58 which state that in the UK amidst 1861 -1957 there was a stable reverse relationship surrounded by the count of depart in al imprintance and the unemployment level. In other words, a high school position of take ostentation was associated with a low rate of unemployment and vice versa. consequently the Phillips curve depicts this inverse relationship between the rate of unemployment and the net inflation. Phillips suggested that historical data showed dapple unemployment degenerate to very low levels, the rate of inflation accelerated to a greater extent rapidly while at very high levels of unemployment inflation levelled off or became negative. FEATURES OF PHILLIPS CURVE 1. The curve was non-linear, successive reductio ns in unemployment being associated with an ever-higher rate of enlist inflation. 2. The curve could pass under the horizontal axis and dumbfound much flatter. Significance of the Phillips Curve The significance of Phillips findings were that since an inverse relationship seemed to exist between unemployment and inflation, completely that a government had to do was to talk terms subscribe in such a way as to ten-strike a balance between an pleasing unemployment rate and an acceptable inflation rate - there was a tradeoff between the two. However the authorities were restricted to those combinations of inflation and unemployment that mystify on the Phillips Curve. ORIGINAL PHILLIPS CURVE Fig.

1 Inflation calculate % 4% B ( A 0 2 % ( 6% Unemployment Rate % In...If you want to get a full essay, order it on our website: OrderEssay.net

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