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Topic: Phillips curve

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In the News (Thu 18 Jul 19)

  Economics and...: Phillips Curve   (Site not responding. Last check: 2007-11-05)
In Arthur Laffer’s case, it might have been carelessness in the use of words, but the latest attack on the Phillips curve by Larry Kudlow (discussed by Mark Thoma and pgl) is unmistakably either disingenuous or ignorant.
That might be a strong argument against the version of the Phillips curve that was widely believed during the 1960s (the “groovey” Phillips curve, as Gabriel Mihalache called it in an earlier comment).
For practical purposes, the Phillips curve – the version that is used to guide forecasts and generate policy prescriptions today – is not a relationship between unemployment and the level of inflation; it is a relationship between unemployment and the change in the inflation rate.
knzn.blogspot.com /2006/08/phillips-curve.html   (858 words)

 Phillips Curve, by Kevin D. Hoover: The Concise Encyclopedia of Economics: Library of Economics and Liberty
Phillips discovered that there was a consistent inverse, or negative, relationship between the rate of wage inflation and the rate of unemployment in the United Kingdom from 1861 to 1957.
The individual observations appear to lie closely along the fitted curve, indicating that the cyclical behavior of inflation and unemployment is similar to the average behavior.
The Phillips curve was hailed in the sixties as providing an account of the inflation process hitherto missing from the conventional macroeconomic model.
www.econlib.org /library/Enc/PhillipsCurve.html   (2104 words)

 Rise of the Phillips Curve
The Phillips curve was based on a 1958 article by A.W. Phillips in which he noted that there was a relationship between unemployment rates and changes in wage rates in the United Kingdom.
The Phillips curve became important when economists began to interpret it as a curve showing the range of possibilities open to the economy.
The Phillips curve seemed to be a trade-off: to get reduced unemployment, the economy must suffer from more inflation, and to get reduced inflation, the economy must suffer from more unemployment.
www.ingrimayne.com /econ/Labor/RisePhil.html   (583 words)

 Can the Phillips Curve Help Forecast Inflation? - FRBSF Economic Letter (10/04/2002)
Their version of the short-run Phillips curve is obtained by regressing the four-quarter change in the inflation rate on the unemployment rate and a constant term.
The need to update the short-run Phillips curve to account for changes in slope or changes in the NAIRU (neither of which can be observed in real time) poses a difficult challenge for anyone who wishes to use the model for the purpose of forecasting inflation.
The evidence suggests that the short-run Phillips curve is more likely to be useful for forecasting the direction of change of future inflation rather than forecasting the actual magnitude of future inflation.
www.frbsf.org /publications/economics/letter/2002/el2002-29.html   (1482 words)

 Curve - Wikipedia, the free encyclopedia
A rectifiable curve is a curve with finite length.
Important examples of algebraic curves are the conics, which are nonsingular curves of degree two and genus zero, and elliptic curves, which are nonsingular curves of genus one studied in number theory and which have important applications to cryptography.
From the nineteenth century there is not a separate curve theory, but rather the appearance of curves as the one-dimensional aspect of projective geometry, and differential geometry; and later topology, when for example the Jordan curve theorem was understood to lie quite deep, as well as being required in complex analysis.
en.wikipedia.org /wiki/Curve   (1569 words)

 Working Paper: The Phillips Curve and Aggregate Demand-Supply Analysis   (Site not responding. Last check: 2007-11-05)
The Phillips Curve fitted to the 1960s U.S. inflation-unemployment data was traced out from right to left during a decade-long period of economic expansion characterized by falling unemployment rates and accelerating inflation.
In any case, it is clear that the Phillips Curve is not a relationship which is sufficiently stable to serve as a basis for macropolicy in regard to inflation and unemployment.
This implies that the short-run Phillips Curve has shifted from PC to PC This is illustrated in Figure 5 by the southwesterly movement toward the bottoms of the spirals over the ranges of 1971-72, 1975-76, 1982-83, and 1992-94.
facweb.furman.edu /~dstanford/workpap/wpPhillips.htm   (1915 words)

 Phillips curve - Wikipedia, the free encyclopedia
The Phillips curve is a historical inverse relation and tradeoff between the rate of unemployment and the rate of inflation in an economy.
Theories based on the Phillips curve suggested that this could not happen, and the curve came under concerted attack from a group of economists headed by Milton Friedman—arguing that the demonstrable failure of the relationship demanded a return to non-interventionist, free market policies.
The main reason behind the failure of the Phillips curve is believed to be that it was a result of a statistical method used by taking data only from the UK and Germany.
en.wikipedia.org /wiki/Phillips_curve   (1825 words)

 Alban W. Phillips
Alban W. Phillips is the man whose name is attached the most (in)famous curve in post-war economics - the "Phillips Curve".
The New Zealand-born Phillips had worked in an Australian mine since he was sixteen, where he learnt electrical engineering; emigrating to Britain in 1937, he was soon involved in World War II and was taken prisoner by the Japanese.
Robert Leeson's "Phillips, Inflationary Expectations, and the Unemployment-Reducing Inflationary Trade-Off".
cepa.newschool.edu /het/profiles/phillips.htm   (541 words)

 Phillips curve: A Glossary of Political Economy Terms - Dr. Paul M. Johnson
During this same period, the earlier assumption that the historically estimated Phillips curve represented a rather stable relationship proved to be grossly inaccurate.
The 1960s, and especially the 1970s, provided economists with numerous new data points that did not fall along the old Phillips curves for the industrialized countries but rather were well to the right of the older data points on the graph.
As a result, the Phillips curve shifts upward and outward to a higher level, further away from the origin of the graph.
www.auburn.edu /~johnspm/gloss/phillips_curve   (709 words)

 Phillips curve (via CobWeb/3.1 planetlab2.isi.jhu.edu)   (Site not responding. Last check: 2007-11-05)
The simple Phillips curve.In macroeconomics, the Phillips curve is a supposed inverse relationship between inflation and unemployment.
The original theories based on the Phillips curve suggested that this could not happen, and the idea that there was a simple, predictable, and persistent relationship between inflation and unemployment was abandoned by most if not all macroeconomists.
However, unlike the Phillips curve that was popular in the 1960s, the New version shifts, so that the "trade-off" can worsen (as in the 1970s) or get better (as in the 1990s).
phillips-curve.iqnaut.net.cob-web.org:8888   (1475 words)

 Inflation and the Phillips Curve
The Phillips Curve was an empirical phenomenon looking for a theory and, around that time, there were two competing theories of inflation, both of which were expressed by Keynes in various places: "demand-pull" inflation and "cost-push" inflation - terms, as Machlup (1960) has shown, that can have a far from obvious meaning.
The non-linearity of the Phillips Curve is justified by appeals to frictional unemployment and institutional difficulties at the extremes.
Thus, the migration of the so-called "short-run" Phillips Curve (as in the move in Figure 14) was explained in terms of ever-higher inflationary expectations.
cepa.newschool.edu /het/essays/keynes/inflation.htm   (5546 words)

 Tutor2u - Phillips Curve
The Phillips curve illustrates the relationship between inflation and unemployment in an economy.
The downward sloping nature of the curve shows that there is, in theory, a trade-off between inflation and unemployment in the short run - this means that in order to lower the rate of unemployment in an economy, say, we must be prepared to have a higher rate of inflation.
The economist A.W. Phillips who first put forward the theory in 1958, demonstrated that one stable curve represented the trade-off between unemployment and inflation, and the previous 96 years of data confirmed this.
www.tutor2u.net /economics/content/topics/inflation/philips_curve.htm   (666 words)

 The Phillips Curve - Inflation and Unemployment   (Site not responding. Last check: 2007-11-05)
Whether the Phillips curve exists or not, the data on inflation and unemployment tells important stories about business cycles.
In fact, the Phillips curve is one of those cases where belief in an economic idea is so appealing that it survives despite contradictory factual evidence.
In some views, when the data does not fit a single Phillips curve, that is simply evidence that the curve has shifted.
www.econreview.com /phillips   (233 words)

 Fall of the Phillips Curve
Instead it was the numbers that the world threw out in the next decade which convinced even the true believers that their original interpretation of the Phillips curve was mistaken.
Those economists who had accepted the Phillips curve as a tradeoff were baffled by such results, which the newspapers of the time dubbed stagflation.
As the short-run Phillips curve shifted upward, positions of high unemployment became compatible with high rates of inflation.
www.ingrimayne.com /econ/Labor/FallPhil.html   (746 words)

 William Phillips (economist) - Wikipedia, the free encyclopedia
Alban William Phillips (1914 – March, 1975) was an influential economist in the middle of the twentieth century.
William Phillips was the son of a New Zealand dairy farmer.
While Phillips was a student at the LSE he developed an analogue computer which used hydraulics to model the workings of the British economy.
en.wikipedia.org /wiki/A.W._Phillips   (763 words)

 Phillips curve - Search Results - MSN Encarta   (Site not responding. Last check: 2007-11-05)
For several decades after World War II (1939-1945) the main inflation theories were demand-pull and cost-push.
Phillips, Wendell (1811-84), American abolitionist leader and political reformer, whose oratorical vigor helped popularize the antislavery cause in...
Curve, in common usage, line that bends continuously and smoothly, that is, without angles, as distinguished from straight or broken lines.
encarta.msn.com /Phillips+curve.html   (134 words)

 New Economist: The return of the Phillips curve
That is why policymakers have recently been debating the implications of the shape of that very 1960s concept, the Phillips curve.
The Phillips curve was named after A.W. Phillips, whose research suggested a trade-off between British unemployment and wage inflation over the period 1861 to 1957.
So the Phillips curve fell out of favour and was replaced by its corollary, the NAIRU, or non-accelerating inflation rate of unemployment (in effect, the natural rate).
neweconomist.blogs.com /new_economist/2006/09/phillips_curve.html   (1853 words)

 An Estimation of the Nonlinear Phillips Curve in Colombia (SMEALSearch) -   (Site not responding. Last check: 2007-11-05)
As originally drawn and estimated by professor Phillips, the Phillips curve is a curve indeed, not a straight line as often thought.
(1999) we estimate a convex Phillips curve and model the NAIRU as a variable that is unobserved.
0.3: The non-linear Phillips curve and inflation forecast..
gunther.smeal.psu.edu /2325.html   (276 words)

 The U.S. Phillips Curve   (Site not responding. Last check: 2007-11-05)
The U.S. Phillips Curve: Inflation and Unemployment, 1960 to the Present
In the 1960s inflation and unemployment in the United States moved back and forth along a stable, favorably-located short-run Phillips curve.
At the end of the 1960s, however, the Phillips curve broke down: loss of confidence in the Federal Reserve's commitment to fighting inflation and the oil shock of 1973 led to a steep increase in expected inflation.
www.j-bradford-delong.net /multimedia/USPCurve.html   (150 words)

 Federal Reserve Bank of Minneapolis - The Region - The Magic's Gone (September 2001)   (Site not responding. Last check: 2007-11-05)
The Phillips curve—supported and elaborated by Paul Samuelson, Robert Solow and other prominent economists—quickly became economics gospel and, among other uses, was employed by policymakers to predict future inflation on the basis of current unemployment.
These theorists argued that the predictive ability of a simple Phillips curve is further limited because people's expectations about inflation change under different economic conditions, so a reliable or stable relationship between rates of inflation and unemployment is unlikely.
The Phillips curve magic that once seemed to give policymakers a clear signpost is now gone.
minneapolisfed.org /pubs/region/01-09/magic.cfm   (2173 words)

 Cases Problems Solution: Phillips Curve & Okuns Law
The "Phillips curve" postulates a tradeoff between inflation and unemployment.
New Zealand economist A.W. Phillips published an article in 1958 that examined the historical relation between inflation and unemployment in the United Kingdom -- lower unemployment was associated with higher inflation.
(a web site for economic analysis and data) asserts that the Phillips Curve is "alive and well." ("The Phillips Curve: Alive and Kicking", January 21, 2000, The Dismal Scientist, http://www.dismal.com/thoughts/th_mz_012100.stm) Zandi, examining data for the period 1994 through 1999, says that there is a direct inverse relationship between labor compensation growth and unemployment rate.
www.csustan.edu /ppa/llg/statdata/capphillipsokunsa.htm   (693 words)

 The Sunspot Phillips Curve   (Site not responding. Last check: 2007-11-05)
This curve dictates an inverse and stable relationship between the rate of inflation and the unemployment rate.
Accepting this traditional formulation of the Phillips curve, Hibbs (1977) pointed out that, in industrial democracies, the parties of the left and right systematically choose different ideal points along this curve.
The Phillips curve tradeoff is one of the central policy choices that are part of the low dimensional policy space.
macht.arts.cornell.edu /jss13/apsa95/node3.html   (3169 words)

 Phillips Curve - Is Unemployment Inflated? [Virtual Economy] (via CobWeb/3.1 planetlab2.isi.jhu.edu)   (Site not responding. Last check: 2007-11-05)
The Phillips Curve was a relationship between unemployment and inflation discovered by Professor A.W. Phillips.
This relationship was seen by Keynesians as a justification of their policies.
However, in the 1970s, the curve began to break down as the economy suffered from unemployment and inflation rising together (stagflation).
www.bized.ac.uk.cob-web.org:8888 /virtual/economy/policy/outcomes/unemployment/unempth4.htm   (186 words)

 Essential Economics: Phillips Curve
The Phillips Curve suggests a short-term trade-off between the rate of unemployment and the rate of inflation.
Friedman accepted that the short run Phillips Curve existed – but that in the long run, it was vertical and that there was no trade-off between unemployment and inflation.
An inward shift in the long run Phillips Curve might be brought about by supply-side improvements to the economy – and in particular a reduction in the natural rate of unemployment.
www.tutor2u.net /economics/content/essentials/phillips_curve.htm   (1131 words)

 RBA:RDP1999-01 The Phillips Curve in Australia
In this paper we discuss the development of Phillips curves in Australia over the forty years since Phillips first estimated one using Australian data.
These Phillips curves allow the NAIRU to change through time, and include a role for import prices and 'speed-limit' effects.
The paper concludes by presenting an extended discussion of the changing role of the Phillips curve in the intellectual framework used to analyse inflation within the Reserve Bank of Australia over the past three decades.
www.rba.gov.au /PublicationsAndResearch/RDP/RDP1999-01.html   (138 words)

 SSRN-A Phillips Curve for China by Jorg Scheibe, David Vines
We estimate a partially forward-looking Phillips curve as well as traditional backward-looking Phillips curves.
Using quarterly data from 1988 to 2002, we estimate a vertical long-run Phillips curve for China and show that the output gap, the exchange rate, and inflation expectations play important roles in explaining inflation.
We evaluate a number of alternative output gap estimates and find that output gaps which are derived from production function estimations for the Chinese economy are of more use in estimating a Phillips curve than output gaps derived from simple statistical trends.
papers.ssrn.com /sol3/papers.cfm?abstract_id=770244   (465 words)

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