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Does the “Phillips Curve” Really Exist? New Empirical Evidence from Malaysia

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  • Fumitaka Furuoka

    () (UMS)

Abstract

The hypothesized trade-off relationship between inflation rate and unemployment rate has been known as the “Phillips curve”. Though the Phillips curve has played an important role in the decision-making process on macroeconomic policy, there have been critics who doubted the existence of the “Phillips curve”. Despite a number of studies on the Phillips curve, there has been a lack of research that probed the hypothesis in the developing countries' context. This paper chooses Malaysia as a case study to empirically examine the relationship between inflation rate and unemployment rate. The most interesting finding of this paper is the existence of a long-run and trade-off relationship – and also causal relationship between the unemployment rate and the inflation rate in Malaysia. In other word, this paper has provided an empirical evidence to support the existence of the Phillips curve in the case of Malaysia.

Suggested Citation

  • Fumitaka Furuoka, 2007. "Does the “Phillips Curve” Really Exist? New Empirical Evidence from Malaysia," Economics Bulletin, AccessEcon, vol. 5(16), pages 1-14.
  • Handle: RePEc:ebl:ecbull:eb-07e20006
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Mario BERGARA & Gerardo LICANDRO & Jorge PONCE, 2014. "Financial Stability Committees: An Institutional Response to New Challenges," Chapters of Challenges to Financial Stability – Perspective, Models and Policies book,in: Renata Karkowska (ed.), Challenges to Financial Stability – Perspective, Models and Policies,Volume II Towards the Financial Stability -Macroprudential Policy and Perspective, volume 2, chapter 10, pages 8-22 ASERS Publishing.
    2. repec:ris:badest:0548 is not listed on IDEAS
    3. repec:ibn:ijefaa:v:10:y:2018:i:2:p:133-141 is not listed on IDEAS
    4. Anna MATYSEK-JEDRYCH, 2014. "The Changing Nature of Central Banks Accountability for Financial Stability," Chapters of Challenges to Financial Stability – Perspective, Models and Policies book,in: Renata Karkowska (ed.), Challenges to Financial Stability – Perspective, Models and Policies,Volume II Towards the Financial Stability -Macroprudential Policy and Perspective, volume 2, chapter 11, pages 23-43 ASERS Publishing.
    5. Larry W. Taylor, 2009. "PENALIZED-R-super-2 CRITERIA FOR MODEL SELECTION," Manchester School, University of Manchester, vol. 77(6), pages 699-717, December.
    6. Warapong Wongwachara & Anusorn Minphimai, 2009. "Unobserved Component Models of the Phillips Relation in the ASEAN Economy," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 5(2), pages 241-256, July.
    7. Fumitaka Furuoka & Qaiser Munir & Hanafiah Harvey, 2013. "Does the Phillips curve exist in the Philippines?," Economics Bulletin, AccessEcon, vol. 33(3), pages 2001-2016.
    8. Ismael, Mohanad & Sadeq, Tareq, 2016. "Does Phillips Exist in Palestine? An Empirical Evidence," MPRA Paper 70245, University Library of Munich, Germany.
    9. Andrea Vaona, 2015. "Anomalous empirical evidence on money long-run super-neutrality and the vertical long-run Phillips curve," Working Papers 17/2015, University of Verona, Department of Economics.
    10. Marinela BARBULESCU & Magdalena RADULESCU, 2014. "Price Stability versus Financial Stability in Romania," Chapters of Challenges to Financial Stability – Perspective, Models and Policies book,in: Renata Karkowska (ed.), Challenges to Financial Stability – Perspective, Models and Policies,Volume II Towards the Financial Stability -Macroprudential Policy and Perspective, volume 2, chapter 16, pages 123-151 ASERS Publishing.
    11. Mohammed Saiful Islam & Riduanul Mustafa, 2017. "Quest for a Valid Phillips Curve in the Long Run: An Empirical Approach," International Business Research, Canadian Center of Science and Education, vol. 10(4), pages 191-198, April.
    12. Touny, Mahmoud, 2013. "Investigate the Long-Run Trade-Off between Inflation and Unemployment in Egypt," MPRA Paper 54561, University Library of Munich, Germany.
    13. Mihaela Simionescu, 2014. "Testing The Existence And Stability Of Phillips Curve In Romania," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 10(1), pages 67-74.
    14. Andrea Vaona, 2016. "The Classical Dichotomy fails in the Eurozone," Economics Bulletin, AccessEcon, vol. 36(4), pages 2183-2191.
    15. Shahbaz, Muhammad & Islam , Faridul & Shabbir, Muhammad Shahbaz, 2012. "Phillips Curve in a Small Open Economy: A Time Series Exploration of North Cyprus," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 35(4), pages 113-130, December.

    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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