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The Taylor curve and the unemployment-inflation tradeoff

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  • Satyajit Chatterjee

Abstract

The subject of our next article, \\"The Taylor Curve and the Unemployment-Inflation Tradeoff,\\" by Satyajit Chatterjee, is finding an optimal monetary policy menu. In the past, monetary policy options were described in terms of a tradeoff between the unemployment rate and the inflation rate, the so-called Phillips curve. Macroeconomists no longer view the Phillips curve as a viable ?policy menu? because its use as such is inconsistent with mainstream macroeconomic theory. In the late 1970s, John Taylor suggested an alternative set of options for policymakers to consider, one that is consistent with macroeconomic theory. These alternative options involve a tradeoff between the variability of output and the variability of inflation

Suggested Citation

  • Satyajit Chatterjee, 2002. "The Taylor curve and the unemployment-inflation tradeoff," Business Review, Federal Reserve Bank of Philadelphia, issue Q3, pages 26-33.
    • Handle: RePEc:fip:fedpbr:y:2002:i:q3:p:26-33
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    Citations

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    Cited by:

    1. Temitope Leshoro & Umakrishnan Kollamparambil, 2016. "Inflation Or Output Targeting? Monetary Policy Appropriateness In South Africa," PSL Quarterly Review, Economia civile, vol. 69(276), pages 77-104.
    2. Nathan Perry & Nathaniel Cline, 2013. "Wages, Exchange Rates, and the Great Inflation Moderation: A Post-Keynesian View," Economics Working Paper Archive wp_759, Levy Economics Institute.
    3. Kesavarajah Mayandy & Paul Middleditch, 2022. "Monetary policy and inflation–output variability in Sri Lanka: Lessons for developing economies," Review of Development Economics, Wiley Blackwell, vol. 26(1), pages 259-279, February.
    4. Sylvain Leduc, 2003. "How inflation hawks escape expectations traps," Business Review, Federal Reserve Bank of Philadelphia, issue Q1, pages 13-20.
    5. Bardsen, Gunnar & Eitrheim, Oyvind & Jansen, Eilev S. & Nymoen, Ragnar, 2005. "The Econometrics of Macroeconomic Modelling," OUP Catalogue, Oxford University Press, number 9780199246502.
    6. Eliphas Ndou & Nombulelo Gumata & Mthuli Ncube & Eric Olson, 2013. "Working Paper 189 - An Empirical Investigation of the Taylor Curve in South Africa," Working Paper Series 992, African Development Bank.
    7. Scobie, Grant M, 2020. "If Bill Phillips were Governor ...? Some implications of his work for contemporary macroeconomic policy," Working Paper Series 21096, Victoria University of Wellington, Chair in Public Finance.
    8. Olson, Eric & Enders, Walter & Wohar, Mark E., 2012. "An empirical investigation of the Taylor curve," Journal of Macroeconomics, Elsevier, vol. 34(2), pages 380-390.

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