Phillips Curve

THE PHILLIPS CURVE INTRODUCTION TO PHILLIPS CURVE The Phillips deform named is after Prof. A.W.Phillips, (1914-75), a New Zealand economist working in the London schooling of Economists in the 50s. He published a paper in 58 which state that in the UK amid 1861 -1957 there was a stable reverse relationship between the count of careen in al imprintance and the unemployment level. In other words, a highschool treasure 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 trim to very low levels, the rate of inflation accelerated much 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 reductions in unemployment being associated with an ever-higher rate of enlist inflation. 2. The curve could pass downstairs 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, in all that a government had to do was to talk terms take up in such a way as to consider a balance between an unobjectionable 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 station % 4% B ( A 0 2 % ( 6% Unemployment Rate % In...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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