The Phillips curve is not what you think it is[La courbe de Phillips n'est pas celle que vous croyez]

Time and again challenged, the Phillips curve is said to have flattened, even in its most sophisticated version, the one incorporating inflation expectations and the natural rate of unemployment. Another economic law to be thrown into the closet, alongside all those that no longer work? More likely, it is an original design flaw tied to the historical context in which it was first identified. The Phillips curve does in fact exist—for countries under fixed exchange rate regimes, both past and present: in that framework, the relationship between unemployment and inflation coincides with the relationship between unemployment and the appreciation of the real exchange rate. In reality, hidden behind the traditional Phillips curve lies a relationship between unemployment and changes in the real exchange rate—a relationship that can be observed under any exchange rate regime, unlike the traditional Phillips curve. A mistake that has led to many others, since in economic policy, neither the diagnoses nor the trade-offs are the same.