Phillips Curve

The Phillps curve, and its long run application considers the apparent trade-off between inflation and unemployment.

Category:

Education

Tags:

• economics
• phillips
• curve
• friedman
• holden
• keynes
• unemployment
• inflation
• trade
• off
• macro
• a-level
• management
• marketing

[PhdBlonde]

Thank you for this. As a prof with a background in IB, I get students, friends, and family fussing about things, and skewing things out of proportion and spinning politics. This is a great example of classic economic theory and testing.

[pajholden]

@PhdBlonde Thank you - I enjoy the theory for its own sake!

[mpdp85]

this guy makes me passionate about economics. i was on the verge of putting my head in a gas oven because my textbook is so boring.

[viavo]

I wonder why I pay tuition fees..everything I learn in university is explained on the internet..way better than in class

thanks for all your videos

[MenziFanclub]

great video!!!!

[Hokrollo1]

@viavo

Reason why you go to university is just to get the paper that you know something about economics:P

[MILMAG1]

@MrWycombewanderers Thanks for your comment. The only way that demand for labor can increase via price inflation is if workers are bound by nominal wage contracts which make the real labor cost lower. But nothing has been said about the other costs that the firms has, which are surely affected adversely by price inflation immediately.

[MrWycombewanderers]

@MILMAG1 He explains it using an ad/as model. With an increase in AD both the price level and Real GDP increases, it also creates an inflationary gap. Workers expect and demand higher wages and thus cost for firms increases as well. But in the long run (sic) it all returns to NAIRU or natural rate of unemployment

[tarooqii]

If only I had you as a teacher! Loving the simplistic approach to complicated theory!

[cinqueottavi]

What's the difference between short term and long term?

[MILMAG1]

This is nonsense!! There is no such trade-off. Why would unemployment fall if costs for firms rise? This makes no sense.

[ConscientiousMind]

@iperman68 So you're saying poor people are stupid? Wow, conspiratorial AND paternalistic at the same time, what an accomplishment!

Your guitar clips are sweet, though. Stick to shredding and stay out of public policy wonkery, please :)

[masguapacallada]

Thanks a lot ! your explanation is great .)