Phillips Curve

Context:
- It can hold that as an Unemployed Population declines then Wage Gains rise.
- …
Example(s):
- U.S. Phillips Curve. .
- …
Counter-Example(s):
- a Beveridge Curve.
- a Price Elasticity Curve.
See: Unemployment, Inflation, Velocity Of Money, Money Supply.

References

https://washingtonpost.com/opinions/wage-stagnation--myth-and-reality/2019/12/15/47c42690-1f69-11ea-bed5-880264cc91a9_story.html
- QUOTE: ... Let’s start with the Phillips Curve. Named after its discoverer — economist A.W. Phillips — it holds that as unemployment declines, wage gains rise. You will hear it said that the Phillips Curve has straightened out; wages don’t rise with falling unemployment. But this is not an explanation. It’s simply a way of describing the basic problem: the disconnect of wages from unemployment. ...

(Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/Phillips_curve Retrieved:2014-3-22.
- In economics, the Phillips curve is a historical inverse relationship between the rate of unemployment and the rate of inflation in an economy. Stated simply, lower unemployment in an economy is correlated with a higher rate of inflation.
  While there is a short run tradeoff between unemployment and inflation, it has not been observed in the long run.^[1] Accordingly, the Phillips curve is now seen as too simplistic, with the unemployment rate supplanted by more accurate predictors of inflation based on velocity of money supply measures such as the MZM ("money zero maturity") velocity, ^[2] which is affected by unemployment in the short but not the long term.^[3]

↑ Chang, R. (1997) "Is Low Unemployment Inflationary?" Federal Reserve Bank of Atlanta Economic Review 1Q97:4-13
↑ MZM velocity
↑ Oliver Hossfeld (2010) "US Money Demand, Monetary Overhang, and Inflation Prediction" International Network for Economic Research working paper no. 2010.4

(Krueger et al., 2014) ⇒ Alan B. Krueger, Judd Cramer, and David Cho. (2014). “Are the Long-Term Unemployed on the Margins of the Labor Market?.” In: Brookings Papers on Economic Activity, Spring 2014.
- QUOTE: A number of observers have noted that in recent years conventional Phillips Curve and Beveridge Curve models predicted greater price deflation, greater real wage declines and fewer vacancies as a result of the high rate of unemployment experienced during the Great Recession and its aftermath than actually occurred. Several economists have provided possible explanations for the missed predictions of the Phillips Curve, based on anchoring of expectations (Bernanke, 2007 and 2010) or changes in the distribution of price increases and interactions in the Phillips Curve (Ball and Mazumder, 2011). Others have shown that the price Phillips Curve relationship is stable if the short-term unemployment rate (defined as the number of job seekers unemployed for 26 weeks or less relative to the labor force) is used instead of the total unemployment rate (Gordon, 2013 and Watson, 2014), while others have shown that the Beveridge Curve relationship is stable if short-term unemployment rate is used instead of the overall unemployment rate (see Ghayad and Dickens, 2012).

http://noahpinionblog.blogspot.com/2011/03/john-taylor-draws-philips-curve.html
- QUOTE: … A Phillips curve is a curve that shows an inverse correlation between inflation and unemployment. And in New Keynesian models, inflation and investment go hand in hand - when the economy is booming, prices rise. So a New Keynesian would expect to see something just like what Taylor drew. And then I remembered something else about Phillips curves - they shift over time. Policy shifts and structural shifts in the economy will, over time, change the tradeoff between inflation and unemployment. If you look at data over more than a decade, you see a series of different curves for different time periods ...