Ch08The Natural Rate of Unemployment and the Phillips Curve(宏观经济学,Blanchard原版)概要1.pptVIP

The Natural Rate of Unemployment andthe Phillips Curve The Natural Rate of Unemploymentand the Phillips Curve The Phillips curve, based on the data above, shows a negative relation between inflation and unemployment. Inflation, ExpectedInflation, and Unemployment The above equation is the aggregate supply relation derived in chapter 7. This relation can be rewritten to establish a relation between inflation, expected inflation, and the unemployment rate. Inflation, ExpectedInflation, and Unemployment The appendix to this chapter shows how to go from the equation above to the relation between inflation, expected inflation, and the unemployment rate below: Inflation, ExpectedInflation, and Unemployment According to this equation: An increase in the expected inflation, ?e, leads to an increase in inflation, ?. Given expected inflation ?e, an increase in the markup, ?, or an increase in the factors that affect wage determination, z, lead to an increase in inflation. Given expected inflation, ?e, an increase in the unemployment rate, u, leads to a decrease in inflation, ?. Inflation, ExpectedInflation, and Unemployment When referring to inflation, expected inflation, or unemployment in a specific year, the equation above needs to include time indexes, as follows: The Phillips Curve If we set ?et = 0, then: Mutations The negative relation between unemployment and inflation held throughout the 1960s, but it vanished after that, for two reasons: An increase in the price of oil, but more importantly, A change in the way wage setters formed expectations due to a change in the behavior of the rate of inflation. The inflation rate became consistently positive, and Inflation became more persistent. Mutations The steady decline in the U.S. unemployment rate throughout the 1960s was associated with a steady increase in the inflation rate. Mutations Beginning in 1970, the relation between the unemployment rate and the inflation rate disappeared in the United States. Mutation