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UnemploymentUnemploymentand Inflationand Inflation
Unemployment and InflationUnemployment and Inflation
Nature of Unemployment
Nature of Unemployment
The meaning of ‘unemployment’ defining the unemployment rate claimant unemployment
The meaning of ‘unemployment’ defining the unemployment rate claimant unemployment
NATURE OF UNEMPLOYMENTNATURE OF UNEMPLOYMENT
UK claimant unemployment flows (millions)UK claimant unemployment flows (millions)
UK claimant unemployment flows (millions)UK claimant unemployment flows (millions)
UK claimant unemployment flows (millions)UK claimant unemployment flows (millions)
UK claimant unemployment flows (millions)UK claimant unemployment flows (millions)
The meaning of ‘unemployment’ defining the unemployment rate claimant unemployment
do claimant statistics give a true picture of unemployment?
The meaning of ‘unemployment’ defining the unemployment rate claimant unemployment
do claimant statistics give a true picture of unemployment?
NATURE OF UNEMPLOYMENTNATURE OF UNEMPLOYMENT
The meaning of ‘unemployment’ defining the unemployment rate claimant unemployment
do claimant statistics give a true picture of unemployment?
standardised unemployment (ILO/OECD)
The meaning of ‘unemployment’ defining the unemployment rate claimant unemployment
do claimant statistics give a true picture of unemployment?
standardised unemployment (ILO/OECD)
NATURE OF UNEMPLOYMENTNATURE OF UNEMPLOYMENT
The duration of unemployment inflows to and outflows from the stock of
unemployment
The duration of unemployment inflows to and outflows from the stock of
unemployment
NATURE OF UNEMPLOYMENTNATURE OF UNEMPLOYMENT
•School/college leavers•People returning to the labour force (e.g. after raising children)
•People made redundant•People sacked•People temporarily laid off•People resigning
UNEMPLOYMENTUNEMPLOYMENT
INFLOWS(per period of time)
From jobs From outside the labour force
Flows into and out of unemploymentFlows into and out of unemployment
•People made redundant•People sacked•People temporarily laid off•People resigning
UNEMPLOYMENTUNEMPLOYMENT
OUTFLOWS(per period of time)
To jobs To outside thelabour force
•People taking new jobs•People returning to old jobs who had been temporarily laid off
•People who have become disheartened and give up looking for a job•People who have reached retirement age•People who temporarily withdraw from labour force (e.g. to raise a family)•People who emigrate•People who die
INFLOWS(per period of time)
From jobs From outside the labour force•School/college leavers•People returning to the labour force (e.g. after raising children)
Flows into and out of unemploymentFlows into and out of unemployment
The duration of unemployment
inflows to and outflows from the stock of unemployment
effects on the duration of unemployment
The duration of unemployment
inflows to and outflows from the stock of unemployment
effects on the duration of unemployment
NATURE OF UNEMPLOYMENTNATURE OF UNEMPLOYMENT
The duration of unemployment
inflows to and outflows from the stock of unemployment
effects on the duration of unemployment
the phase of the business cycle
The duration of unemployment
inflows to and outflows from the stock of unemployment
effects on the duration of unemployment
the phase of the business cycle
NATURE OF UNEMPLOYMENTNATURE OF UNEMPLOYMENT
Unemployment rates in selected industrial countriesUnemployment rates in selected industrial countries
UK
0
2
4
6
8
10
12
14
1970 1975 1980 1985 1990 1995 2000
Une
mpl
oym
ent (
% o
f wor
kfor
ce)
UK
0
2
4
6
8
10
12
14
1970 1975 1980 1985 1990 1995 2000
Une
mpl
oym
ent (
% o
f wor
kfor
ce)
Unemployment rates in selected industrial countriesUnemployment rates in selected industrial countries
0
2
4
6
8
10
12
14
1970 1975 1980 1985 1990 1995 2000
Une
mpl
oym
ent (
% o
f wor
kfor
ce)
UK
France
Unemployment rates in selected industrial countriesUnemployment rates in selected industrial countries
0
2
4
6
8
10
12
14
1970 1975 1980 1985 1990 1995 2000
Une
mpl
oym
ent (
% o
f wor
kfor
ce)
UK
France
Unemployment rates in selected industrial countriesUnemployment rates in selected industrial countries
0
2
4
6
8
10
12
14
1970 1975 1980 1985 1990 1995 2000
Une
mpl
oym
ent (
% o
f wor
kfor
ce)
UK
France
Germany
Unemployment rates in selected industrial countriesUnemployment rates in selected industrial countries
0
2
4
6
8
10
12
14
1970 1975 1980 1985 1990 1995 2000
Une
mpl
oym
ent (
% o
f wor
kfor
ce)
UK
France
Germany
Unemployment rates in selected industrial countriesUnemployment rates in selected industrial countries
0
2
4
6
8
10
12
14
1970 1975 1980 1985 1990 1995 2000
Une
mpl
oym
ent (
% o
f wor
kfor
ce)
UK
France USA
Germany
Unemployment rates in selected industrial countriesUnemployment rates in selected industrial countries
0
2
4
6
8
10
12
14
1970 1975 1980 1985 1990 1995 2000
Une
mpl
oym
ent (
% o
f wor
kfor
ce)
UK
France USA
Germany
Unemployment rates in selected industrial countriesUnemployment rates in selected industrial countries
0
2
4
6
8
10
12
14
1970 1975 1980 1985 1990 1995 2000
Une
mpl
oym
ent (
% o
f wor
kfor
ce)
UK
France USA
Germany Japan
Unemployment rates in selected industrial countriesUnemployment rates in selected industrial countries
0
2
4
6
8
10
12
14
1970 1975 1980 1985 1990 1995 2000
Une
mpl
oym
ent (
% o
f wor
kfor
ce)
UK
France USA
Germany Japan
Unemployment rates in selected industrial countriesUnemployment rates in selected industrial countries
0
2
4
6
8
10
12
14
1970 1975 1980 1985 1990 1995 2000
Une
mpl
oym
ent (
% o
f wor
kfor
ce)
UK
France USA
Germany Japan
OECD
Unemployment rates in selected industrial countriesUnemployment rates in selected industrial countries
0
2
4
6
8
10
12
14
1970 1975 1980 1985 1990 1995 2000
Une
mpl
oym
ent (
% o
f wor
kfor
ce)
UK
France USA
Germany Japan
OECD
Unemployment rates in selected industrial countriesUnemployment rates in selected industrial countries
The composition of unemployment by geographical region
by sex
by age
by ethnic groups
The costs of unemployment to the unemployed themselves
to family and friends
to society at large
The composition of unemployment by geographical region
by sex
by age
by ethnic groups
The costs of unemployment to the unemployed themselves
to family and friends
to society at large
NATURE OF UNEMPLOYMENTNATURE OF UNEMPLOYMENT
Unemployment and InflationUnemployment and Inflation
Causes of Unemployment
Causes of Unemployment
Unemployment and the labour market aggregate demand and supply of labour
Unemployment and the labour market aggregate demand and supply of labour
CAUSES OF UNEMPLOYMENTCAUSES OF UNEMPLOYMENT
Disequilibrium unemploymentDisequilibrium unemployment
O
Ave
rag
e (r
ea
l) w
ag
e ra
te
No. of workers
ASL
ADL
Unemployment and the labour market
aggregate demand and supply of labour
equilibrium in the model
Unemployment and the labour market
aggregate demand and supply of labour
equilibrium in the model
CAUSES OF UNEMPLOYMENTCAUSES OF UNEMPLOYMENT
Qe
Disequilibrium unemploymentDisequilibrium unemployment
O
Ave
rag
e (r
ea
l) w
ag
e ra
te
No. of workers
ASL
ADL
We
Unemployment and the labour market
aggregate demand and supply of labour
equilibrium in the model
disequilibrium unemployment
Unemployment and the labour market
aggregate demand and supply of labour
equilibrium in the model
disequilibrium unemployment
CAUSES OF UNEMPLOYMENTCAUSES OF UNEMPLOYMENT
O
Ave
rag
e (r
ea
l) w
ag
e ra
te
No. of workers
ASL
ADL
We
W2
Disequilibrium unemploymentDisequilibrium unemployment
Q2 Q1
B A
Unemployment and the labour market
aggregate demand and supply of labour
equilibrium in the model
disequilibrium unemployment
equilibrium unemployment
Unemployment and the labour market
aggregate demand and supply of labour
equilibrium in the model
disequilibrium unemployment
equilibrium unemployment
CAUSES OF UNEMPLOYMENTCAUSES OF UNEMPLOYMENT
Equilibrium unemploymentEquilibrium unemployment
O
Ave
rag
e (r
ea
l) w
ag
e ra
te
No. of workers
ADL
We
ASL
e
Qe
Q2QeO
Ave
rag
e (r
ea
l) w
ag
e ra
te
No. of workers
ASL
ADL
We
N
e d
Equilibrium unemploymentEquilibrium unemployment
Equilibrium and disequilibrium unemploymentEquilibrium and disequilibrium unemployment
O
Ave
rag
e (r
ea
l) w
ag
e ra
te
No. of workers
ADL
We
e
Qe
ASL
O
Ave
rag
e (r
ea
l) w
ag
e ra
te
No. of workers
ASL
ADL
We
W2
b a
e
Disequilibriumunemployment
Equilibrium and disequilibrium unemploymentEquilibrium and disequilibrium unemployment
O
Ave
rag
e (r
ea
l) w
ag
e ra
te
No. of workers
ASL
ADL
We
W2
b a
e
N
c
Equilibriumunemployment
Disequilibriumunemployment
Equilibrium and disequilibrium unemploymentEquilibrium and disequilibrium unemployment
Disequilibrium unemployment
real-wage (classical) unemployment
Disequilibrium unemployment
real-wage (classical) unemployment
CAUSES OF UNEMPLOYMENTCAUSES OF UNEMPLOYMENT
O
Ave
rag
e (r
ea
l) w
ag
e ra
te
No. of workers
ASL
ADL
We
W1
QeQ2 Q1
ADL 2
b’
Real-wage unemploymentReal-wage unemployment
b a
Disequilibrium unemployment
real-wage (classical) unemployment
demand-deficient (cyclical) unemployment
Disequilibrium unemployment
real-wage (classical) unemployment
demand-deficient (cyclical) unemployment
CAUSES OF UNEMPLOYMENTCAUSES OF UNEMPLOYMENT
ADL 2
O
Ave
rag
e (r
ea
l) w
ag
e ra
te
No. of workers
ADL 1
W1
Q1Q2
W2
ASL
Demand-deficient unemploymentDemand-deficient unemployment
Disequilibrium unemployment
real-wage (classical) unemployment
demand-deficient (cyclical) unemployment
unemployment arising from a growth in the labour supply
Disequilibrium unemployment
real-wage (classical) unemployment
demand-deficient (cyclical) unemployment
unemployment arising from a growth in the labour supply
CAUSES OF UNEMPLOYMENTCAUSES OF UNEMPLOYMENT
Equilibrium unemployment
frictional (search) unemployment
Equilibrium unemployment
frictional (search) unemployment
CAUSES OF UNEMPLOYMENTCAUSES OF UNEMPLOYMENT
O
Wag
e ra
te
Period of search
t l
Wage rate offered (Wo)
Wage rate acceptable to worker (Wa)
Average duration of unemploymentAverage duration of unemployment
Equilibrium unemployment
frictional (search) unemployment
structural unemployment
Equilibrium unemployment
frictional (search) unemployment
structural unemployment
CAUSES OF UNEMPLOYMENTCAUSES OF UNEMPLOYMENT
Equilibrium unemployment
frictional (search) unemployment
structural unemployment
changing pattern of demand
Equilibrium unemployment
frictional (search) unemployment
structural unemployment
changing pattern of demand
CAUSES OF UNEMPLOYMENTCAUSES OF UNEMPLOYMENT
Equilibrium unemployment
frictional (search) unemployment
structural unemployment
changing pattern of demand
regional unemployment
Equilibrium unemployment
frictional (search) unemployment
structural unemployment
changing pattern of demand
regional unemployment
CAUSES OF UNEMPLOYMENTCAUSES OF UNEMPLOYMENT
Equilibrium unemployment
frictional (search) unemployment
structural unemployment
changing pattern of demand
regional unemployment
technological unemployment
Equilibrium unemployment
frictional (search) unemployment
structural unemployment
changing pattern of demand
regional unemployment
technological unemployment
CAUSES OF UNEMPLOYMENTCAUSES OF UNEMPLOYMENT
Equilibrium unemployment
frictional (search) unemployment
structural unemployment
changing pattern of demand
regional unemployment
technological unemployment
seasonal unemployment
Equilibrium unemployment
frictional (search) unemployment
structural unemployment
changing pattern of demand
regional unemployment
technological unemployment
seasonal unemployment
CAUSES OF UNEMPLOYMENTCAUSES OF UNEMPLOYMENT
Unemployment and InflationUnemployment and Inflation
Aggregate Demand, Aggregate Supply and
the Price Level
Aggregate Demand, Aggregate Supply and
the Price Level
The aggregate demand curve The aggregate demand curve
AD, AS and the PRICE LEVELAD, AS and the PRICE LEVEL
O
Pri
ce le
vel
National output
AD
Aggregate demand and aggregate supplyAggregate demand and aggregate supply
Why the AD curve slopes downwards
foreign trade effect
real balance effect
interest rate effect
The shape of the AD curve
Shifts in the AD curve
The aggregate demand curve
The aggregate supply curve
The aggregate demand curve
The aggregate supply curve
AD, AS and the PRICE LEVELAD, AS and the PRICE LEVEL
O
Pri
ce le
vel
National output
AS
short-run and long-run AS curves
the shape of the AS curve
shift in the AS curve
Aggregate demand and aggregate supplyAggregate demand and aggregate supply
The aggregate demand curve
The aggregate supply curve
Equilibrium
The aggregate demand curve
The aggregate supply curve
Equilibrium
AD, AS and the PRICE LEVELAD, AS and the PRICE LEVEL
O
Pri
ce le
vel
National output
AS
AD
Pe
P2
ab
Aggregate demand and aggregate supplyAggregate demand and aggregate supply
The aggregate demand curve
The aggregate supply curve
Equilibrium
shifts in the AD curve
The aggregate demand curve
The aggregate supply curve
Equilibrium
shifts in the AD curve
AD, AS and the PRICE LEVELAD, AS and the PRICE LEVEL
The aggregate demand curve
The aggregate supply curve
Equilibrium
shifts in the AD curve
shifts in the AS curve
The aggregate demand curve
The aggregate supply curve
Equilibrium
shifts in the AD curve
shifts in the AS curve
AD, AS and the PRICE LEVELAD, AS and the PRICE LEVEL
Unemployment and InflationUnemployment and Inflation
InflationInflation
Defining inflation
International experience of inflation
Defining inflation
International experience of inflation
INFLATIONINFLATION
Inflation rates for selected countries(average % per annum)
Inflation rates for selected countries(average % per annum)
Inflation rates for selected countries(average % per annum)
Inflation rates for selected countries(average % per annum)
Inflation rates for selected countries(average % per annum)
Inflation rates for selected countries(average % per annum)
UK
Inflation rates in selected industrial countriesInflation rates in selected industrial countries
-2
0
2
4
6
8
10
12
14
16
18
20
22
24
26
1965 1970 1975 1980 1985 1990 1995 2000
Infla
tion
(% in
crea
se in
reta
il pr
ices
)
UK
-2
0
2
4
6
8
10
12
14
16
18
20
22
24
26
1965 1970 1975 1980 1985 1990 1995 2000
Infla
tion
(% in
crea
se in
reta
il pr
ices
)Inflation rates in selected industrial countriesInflation rates in selected industrial countries
-2
0
2
4
6
8
10
12
14
16
18
20
22
24
26
1965 1970 1975 1980 1985 1990 1995 2000
Infla
tion
(% in
crea
se in
reta
il pr
ices
)
UK
EU 15
Inflation rates in selected industrial countriesInflation rates in selected industrial countries
-2
0
2
4
6
8
10
12
14
16
18
20
22
24
26
1965 1970 1975 1980 1985 1990 1995 2000
Infla
tion
(% in
crea
se in
reta
il pr
ices
)
UK
EU 15
Inflation rates in selected industrial countriesInflation rates in selected industrial countries
-2
0
2
4
6
8
10
12
14
16
18
20
22
24
26
1965 1970 1975 1980 1985 1990 1995 2000
Infla
tion
(% in
crea
se in
reta
il pr
ices
)
UK
EU 15
USA
Inflation rates in selected industrial countriesInflation rates in selected industrial countries
-2
0
2
4
6
8
10
12
14
16
18
20
22
24
26
1965 1970 1975 1980 1985 1990 1995 2000
Infla
tion
(% in
crea
se in
reta
il pr
ices
)
UK
EU 15
USA
Inflation rates in selected industrial countriesInflation rates in selected industrial countries
-2
0
2
4
6
8
10
12
14
16
18
20
22
24
26
1965 1970 1975 1980 1985 1990 1995 2000
Infla
tion
(% in
crea
se in
reta
il pr
ices
)
UK
EU 15 Japan
USA
Inflation rates in selected industrial countriesInflation rates in selected industrial countries
-2
0
2
4
6
8
10
12
14
16
18
20
22
24
26
1965 1970 1975 1980 1985 1990 1995 2000
Infla
tion
(% in
crea
se in
reta
il pr
ices
)
UK
EU 15 Japan
USA
Inflation rates in selected industrial countriesInflation rates in selected industrial countries
UK
EU 15 Japan
USAOECD
-2
0
2
4
6
8
10
12
14
16
18
20
22
24
26
1965 1970 1975 1980 1985 1990 1995 2000
Infla
tion
(% in
crea
se in
reta
il pr
ices
)Inflation rates in selected industrial countriesInflation rates in selected industrial countries
UK
EU 15 Japan
USAOECD
-2
0
2
4
6
8
10
12
14
16
18
20
22
24
26
1965 1970 1975 1980 1985 1990 1995 2000
Infla
tion
(% in
crea
se in
reta
il pr
ices
)Inflation rates in selected industrial countriesInflation rates in selected industrial countries
The costs of inflation
redistribution
uncertainty
balance of payments
resources used to cope with inflation
The costs of inflation
redistribution
uncertainty
balance of payments
resources used to cope with inflation
INFLATIONINFLATION
Types of inflation demand pull
Types of inflation demand pull
INFLATIONINFLATION
Demand-pull inflationDemand-pull inflation
O
Pri
ce le
vel
National output
AS
AD1
P1
Q1
O
Pri
ce le
vel
National output
AS
AD1
P1
Q1
AD2
Demand-pull inflationDemand-pull inflation
O
Pri
ce le
vel
National output
AS
AD1
P1
Q1
AD2
P2
Q2
Demand-pull inflationDemand-pull inflation
Types of inflation demand pull cost push
Types of inflation demand pull cost push
INFLATIONINFLATION
Cost-push inflationCost-push inflation
O
Pri
ce le
vel
National output
AS1
AD
P1
Q1
O
Pri
ce le
vel
National output
AS1
AD
P1
Q1
AS2
Cost-push inflationCost-push inflation
O
Pri
ce le
vel
National output
AS1
AD
P1
Q1
AS2
P2
Q2
Cost-push inflationCost-push inflation
Types of inflation demand pull cost push interaction of demand-pull and cost-push
inflation
Types of inflation demand pull cost push interaction of demand-pull and cost-push
inflation
INFLATIONINFLATION
The interaction of demand-pull and cost-push inflationThe interaction of demand-pull and cost-push inflation
O
Pri
ce le
vel
National output
AS1
AD1
P1
O
Pri
ce le
vel
National output
AS1
AD1
P1
AS2
AD2
P2
The interaction of demand-pull and cost-push inflationThe interaction of demand-pull and cost-push inflation
O
Pri
ce le
vel
National output
AS1
AD1
P1
AD2
P2
AS3
AD3
P3
The interaction of demand-pull and cost-push inflationThe interaction of demand-pull and cost-push inflation
AS2
Types of inflation demand pull cost push interaction of demand-pull and cost-push
inflation structural (demand shift)
Types of inflation demand pull cost push interaction of demand-pull and cost-push
inflation structural (demand shift)
INFLATIONINFLATION
Types of inflation demand pull cost push interaction of demand-pull and cost-push
inflation structural (demand shift) expectations and inflation
Types of inflation demand pull cost push interaction of demand-pull and cost-push
inflation structural (demand shift) expectations and inflation
INFLATIONINFLATION
Types of inflation demand pull cost push interaction of demand-pull and cost-push
inflation structural (demand shift) expectations and inflation
Policies to tackle inflation
Types of inflation demand pull cost push interaction of demand-pull and cost-push
inflation structural (demand shift) expectations and inflation
Policies to tackle inflation
INFLATIONINFLATION
Types of inflation demand pull cost push interaction of demand-pull and cost-push
inflation structural (demand shift) expectations and inflation
Policies to tackle inflation demand-side policies
Types of inflation demand pull cost push interaction of demand-pull and cost-push
inflation structural (demand shift) expectations and inflation
Policies to tackle inflation demand-side policies
INFLATIONINFLATION
Types of inflation demand pull cost push interaction of demand-pull and cost-push
inflation structural (demand shift) expectations and inflation
Policies to tackle inflation demand-side policies supply-side policies
Types of inflation demand pull cost push interaction of demand-pull and cost-push
inflation structural (demand shift) expectations and inflation
Policies to tackle inflation demand-side policies supply-side policies
INFLATIONINFLATION
Unemployment and InflationUnemployment and Inflation
Relationship between Unemployment and
Inflation
Relationship between Unemployment and
Inflation
Aggregate demand and inflation and unemployment
effects of increases in aggregate demand (relative to potential output)
how the objectives vary with the course of the business cycle
The Phillips curve
the original curve
the apparent policy implications
Aggregate demand and inflation and unemployment
effects of increases in aggregate demand (relative to potential output)
how the objectives vary with the course of the business cycle
The Phillips curve
the original curve
the apparent policy implications
RELATIONSHIP BETWEENINFLATION AND UNEMPLOYMENT
RELATIONSHIP BETWEENINFLATION AND UNEMPLOYMENT
0
1
2
3
4
5
6
7
8
9
0 1 2 3 4 5 6
The original Phillips curveThe original Phillips curve
Unemployment (%)
Wa
ge in
flatio
n (
%)
The 'Phillips curve' in recent times
the breakdown of the Phillips curve and the problem of stagflation in the 1970s
The 'Phillips curve' in recent times
the breakdown of the Phillips curve and the problem of stagflation in the 1970s
RELATIONSHIP BETWEENINFLATION AND UNEMPLOYMENT
RELATIONSHIP BETWEENINFLATION AND UNEMPLOYMENT
Inflation (%)
Unemployment (%)
The breakdown of the Phillips curve?The breakdown of the Phillips curve?
6763
6265
6664
60
61
0
2
4
6
8
10
12
14
16
18
20
22
24
26
0 1 2 3 4 5 6 7 8 9 10 11 12 13
Inflation (%)
Unemployment (%)
The breakdown of the Phillips curve?The breakdown of the Phillips curve?
6763
6265
6664
60
61
0
2
4
6
8
10
12
14
16
18
20
22
24
26
0 1 2 3 4 5 6 7 8 9 10 11 12 13
Original Phillips curve
74
7173
7072
Inflation (%)
Unemployment (%)
The breakdown of the Phillips curve?The breakdown of the Phillips curve?
6968
6763
6265
6664
60
61
0
2
4
6
8
10
12
14
16
18
20
22
24
26
0 1 2 3 4 5 6 7 8 9 10 11 12 13
75
74
76
77
79
7173
7072
78
Inflation (%)
Unemployment (%)
The breakdown of the Phillips curve?The breakdown of the Phillips curve?
6968
6763
6265
6664
60
61
0
2
4
6
8
10
12
14
16
18
20
22
24
26
0 1 2 3 4 5 6 7 8 9 10 11 12 13
The 'Phillips curve' in recent times
the breakdown of the Phillips curve and the problem of stagflation in the 1970s
experience of the 1980s
The 'Phillips curve' in recent times
the breakdown of the Phillips curve and the problem of stagflation in the 1970s
experience of the 1980s
RELATIONSHIP BETWEENINFLATION AND UNEMPLOYMENT
RELATIONSHIP BETWEENINFLATION AND UNEMPLOYMENT
0
2
4
6
8
10
12
14
16
18
20
22
24
26
0 1 2 3 4 5 6 7 8 9 10 11 12 13
75
74
8076
77
79
7173
7072
78 82
8384
85
81
Inflation (%)
Unemployment (%)
The breakdown of the Phillips curve?The breakdown of the Phillips curve?
6968
6763
6265
6664
60
61
The 'Phillips curve' in recent times
the breakdown of the Phillips curve and the problem of stagflation in the 1970s
experience of the 1980s
experience of recent years
The 'Phillips curve' in recent times
the breakdown of the Phillips curve and the problem of stagflation in the 1970s
experience of the 1980s
experience of recent years
RELATIONSHIP BETWEENINFLATION AND UNEMPLOYMENT
RELATIONSHIP BETWEENINFLATION AND UNEMPLOYMENT
75
74
8076
77
79
7173
7072
78
90
89
9188
95
82
8384
85
86
93
8792
94
81
Inflation (%)
Unemployment (%)
The breakdown of the Phillips curve?The breakdown of the Phillips curve?
6968
6763
6265
6664
60
61
0
2
4
6
8
10
12
14
16
18
20
22
24
26
0 1 2 3 4 5 6 7 8 9 10 11 12 13
The 'Phillips curve' in recent times
the breakdown of the Phillips curve and the problem of stagflation in the 1970s
experience of the 1980s
experience of recent years
a horizontal Phillips curve?
The 'Phillips curve' in recent times
the breakdown of the Phillips curve and the problem of stagflation in the 1970s
experience of the 1980s
experience of recent years
a horizontal Phillips curve?
RELATIONSHIP BETWEENINFLATION AND UNEMPLOYMENT
RELATIONSHIP BETWEENINFLATION AND UNEMPLOYMENT
0
2
4
6
8
10
12
14
16
18
20
22
24
26
0 1 2 3 4 5 6 7 8 9 10 11 12 13
75
74
8076
77
79
7173
7072
78
90
89
9796
9188
95
82
8384
85
86
93
8792
94
81
Inflation (%)
Unemployment (%)
The breakdown of the Phillips curve?The breakdown of the Phillips curve?
6968
6763
6265
6664
60
6199
9800
0102
The 'Phillips curve' in recent times
the breakdown of the Phillips curve and the problem of stagflation in the 1970s
experience of the 1980s
experience of recent years
a horizontal Phillips curve?
Output gaps
The 'Phillips curve' in recent times
the breakdown of the Phillips curve and the problem of stagflation in the 1970s
experience of the 1980s
experience of recent years
a horizontal Phillips curve?
Output gaps
RELATIONSHIP BETWEENINFLATION AND UNEMPLOYMENT
RELATIONSHIP BETWEENINFLATION AND UNEMPLOYMENT
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
7
1980 1985 1990 1995 2000Out
put g
ap (
actu
al o
utpu
t min
us s
usta
inab
le o
utpu
t as
a %
of s
usta
inab
le o
utpu
t)Output gaps in selected countries: 1980-2003Output gaps in selected countries: 1980-2003
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
7
1980 1985 1990 1995 2000Out
put g
ap (
actu
al o
utpu
t min
us s
usta
inab
le o
utpu
t as
a %
of s
usta
inab
le o
utpu
t)Output gaps in selected countries: 1980-2003Output gaps in selected countries: 1980-2003
UK
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
7
1980 1985 1990 1995 2000Out
put g
ap (
actu
al o
utpu
t min
us s
usta
inab
le o
utpu
t as
a %
of s
usta
inab
le o
utpu
t)Output gaps in selected countries: 1980-2003Output gaps in selected countries: 1980-2003
UK
USA
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
7
1980 1985 1990 1995 2000Out
put g
ap (
actu
al o
utpu
t min
us s
usta
inab
le o
utpu
t as
a %
of s
usta
inab
le o
utpu
t)Output gaps in selected countries: 1980-2003Output gaps in selected countries: 1980-2003
UK
USA
Germany
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
7
1980 1985 1990 1995 2000Out
put g
ap (
actu
al o
utpu
t min
us s
usta
inab
le o
utpu
t as
a %
of s
usta
inab
le o
utpu
t)Output gaps in selected countries: 1980-2003Output gaps in selected countries: 1980-2003
UK
USA
Germany
Japan
The 'Phillips curve' in recent times
the breakdown of the Phillips curve and the problem of stagflation in the 1970s
experience of the 1980s
experience of recent years
a horizontal Phillips curve?
Output gaps
Complexity of the relationship between inflation and unemployment
The 'Phillips curve' in recent times
the breakdown of the Phillips curve and the problem of stagflation in the 1970s
experience of the 1980s
experience of recent years
a horizontal Phillips curve?
Output gaps
Complexity of the relationship between inflation and unemployment
RELATIONSHIP BETWEENINFLATION AND UNEMPLOYMENT
RELATIONSHIP BETWEENINFLATION AND UNEMPLOYMENT