TITLE:
The Modern Phillips Curve Revisited
AUTHORS:
Jinpeng Ma
KEYWORDS:
Phillips Curve; Business Cycle; Inflation; Unemployment
JOURNAL NAME:
Modern Economy,
Vol.5 No.3,
March
19,
2014
ABSTRACT: The modern Phillips curve is about the
relationship between the average rates of inflation and unemployment. We will
provide additional empirical evidence in the US economy from 1948:01 to 2013:03
that helps demonstrate why such a relationship has been built on a wrong
methodology, as revealed in Ma [1]. An erroneous approach can lead to a misunderstanding of business
cycles and a wrongful implementation of monetary policy. In particular, the way
how the two rates may evolve is now at a critical moment for the Fed to
decide if an exit from its quantitative easing should be initiated.