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Phillips Curves, Phillips Lines and the Unemplyment Costs of Overheating
Author:
Mr. Douglas Laxton
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Mr. Peter B. Clark
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Series:
IMF Working Papers
Volume/Issue:
Volume 1997: Issue 017
Language:
English
Publication Date:
01 Feb 1997
DOI:
https://doi.org/10.5089/9781451843507.001
ISBN:
9781451843507
ISSN:
1018-5941
Pages:
50
Keywords:
WP; excess demand; inflation rate; monetary policy
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Most empirical work on the U.S. Phillips curve has had a strong tendency to impose global linearity on the data. The basic objective of this paper is to reconsider the issue of nonlinearity and to underscore its importance for policymaking. After briefly reviewing the history of the Phillips curve and the basis for convexity, we derive it explicitly using standard models of wage and price determination. We provide some empirical estimates of Phillips curves and Phillips lines for the United States and use some illustrative simulations to contrast the policy implications of the two models.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund