Is There a Long-Run Trade-Off between Inflation and Unemployment?
AbstractHow are inflation and unemployment related in the long run? Are they negatively correlated, as in the so-called naive Phillips curve theories or uncorrelated, "as in the neo-liberals' view or are they positively correlated as Friedman suggested in his Nobel lecture? In this paper inflation is introduced into a general equilibrium search unemployment model. We show that it is possible to get either a negatively or a positively sloping long-run Phillips curve, all depending on the source of inflation.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 150.
Length: 28 pages
Date of creation: Dec 1985
Date of revision:
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Unemployment; inflation; Phillips curve; general equilibrium;
Find related papers by JEL classification:
- D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
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