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Is There a Long-Run Trade-Off between Inflation and Unemployment?

Author

Listed:
  • Axell, Bo

    (Research Institute of Industrial Economics (IFN))

  • Lang, Harald

    (Research Institute of Industrial Economics (IFN))

Abstract

How 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.

Suggested Citation

  • Axell, Bo & Lang, Harald, 1985. "Is There a Long-Run Trade-Off between Inflation and Unemployment?," Working Paper Series 150, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0150
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    More about this item

    Keywords

    Unemployment; inflation; Phillips curve; general equilibrium;
    All these keywords.

    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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