Title: Policy implications of a non-linear Phillips curve in a stochastic environment
Abstract: When the Phillips curve is non-linear, fluctuations of the unemployment rate below the mean will have a larger impact on the inflation rate than fluctuations above the mean. This paper shows that this causes conventional measures of the “natural unemployment rate” to underestimate the mean unemployment rate consistent with stable inflation in the long run. More importantly, it reveals a potential long-run trade-off between unemployment and economic stability.
Publication Year: 1981
Publication Date: 1981-12-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 1
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