Which view of Phillips Curve is correct?
- Monetarists point to the 1970s where there appeared to be a breakdown in the Phillips curve.
- The UK experienced stagflation which is a period of rising unemployment and inflation
- Keynesian would respond to this by arguing that the Phillips curve had merely shifted to the right because of a rise in structural unemployment and structural inflation. For example in the 1970s there was an increase in cost push inflation due to rising oil prices and powerful trades unions
- Recent evidence in the UK shows us that both inflation and unemployment have fallen since 1992. This suggests that there is not a trade off but that it is possible to reduce both if there is suitable supply side policies
Revision Notes on Unemployment
Which is Correct? - Monetarist or Keynesian View
Unemployment Essays
- Explain what is meant by Natural Rate of Unemployment?
- What Can Cause Natural Rate of Unemployment to Change over time?
- Should the Main Macro Economic Aim of the Government be Full Employment?
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