https://www.veritaswiki.org/index.php?action=history&feed=atom&title=Phillips_CurvePhillips Curve - Revision history2026-10-19T19:21:10ZRevision history for this page on the wikiMediaWiki 1.45.3https://www.veritaswiki.org/index.php?title=Phillips_Curve&diff=63&oldid=prevToto: Created English encyclopedia entry on Phillips Curve following Wikipedia-style standards2026-10-06T04:13:35Z<p>Created English encyclopedia entry on Phillips Curve following Wikipedia-style standards</p>
<p><b>New page</b></p><div>The '''Phillips curve''' is an economic model that depicts an inverse relationship between the [[unemployment]] rate and the rate of [[inflation]]. It was proposed by [[A. W. Phillips]] in 1958, based on empirical evidence from the United Kingdom, and became a central tool in [[macroeconomics]] and in the analysis of [[monetary policy]].<ref name="wiki">Wikipedia contributors, "Phillips curve".</ref><br />
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== The original Phillips curve ==<br />
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Phillips observed that, over a long period, lower unemployment was associated with higher wage inflation, and vice versa. This empirical relationship suggested that policymakers could choose between lower unemployment and lower inflation—a trade-off that appeared to offer a menu of policy options.<ref name="wiki"/><br />
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== Expectations and the curve ==<br />
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The apparent trade-off broke down in the 1970s, when many economies experienced '''stagflation'''—high inflation combined with high unemployment. This led economists such as [[Milton Friedman]] and [[Edmund Phelps]] to develop the '''expectations-augmented Phillips curve''', which distinguishes between short-run and long-run relationships:<br />
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{| class="wikitable"<br />
! Horizon<br />
! Relationship<br />
|-<br />
| Short run<br />
| A trade-off between inflation and unemployment exists.<br />
|-<br />
| Long run<br />
| No permanent trade-off; the curve is vertical at the natural rate of unemployment.<br />
|}<br />
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In the long run, inflation is determined by the growth of the money supply, and unemployment returns to its '''natural rate''' (the non-accelerating inflation rate of unemployment, or NAIRU), regardless of the inflation rate.<ref name="wiki"/><br />
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== Policy implications ==<br />
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The Phillips curve is central to the conduct of monetary policy. If a central bank attempts to hold unemployment below its natural rate by accepting higher inflation, expectations of inflation will eventually rise and the trade-off will vanish. This insight contributed to the shift toward central bank independence and inflation targeting.<ref name="wiki"/><br />
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== See also ==<br />
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* [[Inflation]]<br />
* [[Unemployment]]<br />
* [[Laffer Curve]]<br />
* [[Monetary Policy]]<br />
* [[Macroeconomics]]<br />
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== References ==<br />
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<references /><br />
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[[Category:Economics]]<br />
[[Category:Macroeconomics]]<br />
[[Category:Monetary economics]]</div>Toto