Long-run Phillips curve

Updated: Aug 20, 2021

A curve depicting a long-run relation between inflation and unemployment. This is drawn adopting the assumption that the appropriate short-term Phillips curve is that augmented for inflation, and inflation are equal. If models featuring a non-accelerating inflation rate of unemployment (NAIRU) are correct, the long-run Phillips curve is a vertical line at the NAIRU. If such models are not correct, there could be a non-vertical long-run Phillips curve, which while it was steeper than the short-run curves, was still not actually vertical. This would leave some scope for a long-run trade-off between inflation and unemployment, which does not exist if the long-run Phillips curve is vertical.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.