Does the philips curve exist? : cross-section evidences from allover the world

Author: 
Muchdie

This paper provides evidences that the Philips curve exists in the world’s economy. The Philips curve depicted a negative correlation between the rate of inflation and unemployment rate. This dilemma has been a big problem faced by any government. Inflation cannot be eliminated without raising unemployment, at least for some time and moderate unemployment cannot be cut sharply without the risk of raising inflation. It was empirically evidence that this curve exist in the short-run. Inflation cannot be reduced without creating a recession. Using cross-section data on inflation rate and rate of unemployment from 182countries all over the world: 49 countries in Asia, 52 countries in Africa, 39 countries in Europe and 29 countries in America, this paper proved that there was a negative correlation between the rate of inflation and unemployment rate. It means that the Philipscurve do exists in economy, but the relationship between them was not statistically significant.

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