EHC12 Macroeconomics Blog

  Phillips Curve - Switzerland Switzerland has maintained a very steady rate of unemployment throughout the past 10 years. This has resulted in a chart showing mostly inflation data and some extreme events of unemployment. The average inflation rate for the past 10 years was close to 0 and the average unemployment was 7.75. This graph does not reflect the Phillips curve mainly due to the consistent national unemployment rate. The low points in inflation do not reflect on unemployment and vice versa. Although the Phillips curve is accurate theoretically, I believe that the central bank and unemployment systems affect the way the Phillips curve would work in a real situation. However, when you consider the outliers or "extremes" in the chart, you can see that changes in inflation do affect unemployment and vice versa in a way that would reflect the Phillips Curve. Despite this, the trendline of the chart does not follow the Phillips Curve. Especially in a country like Switzer...

  The Phillips Curve Model does not hold true in Germany, and uneployment levels do not have an inverse relationship with the rate of inflation. According to the Phillips Curve, when a country has high unemployment, there are lower levels of inflation as consumers are purchasing fewer items, and when unemployment is low, demand rises and there is a subsequent upward pressure on prices. This theoretically makes sense, but the relationship between Germany’s inflation and unemployment rates serve as proof that there is not always a perfectly inverse relationship.  The Phillips curve is commonly criticized for its disregard of other inflationary factors and its broad assumption that economic growth always leads to an increase in inflation rates. Public spending, indirect taxes, genuine shortages and natural disasters or pandemics (ex. Covid) all lead to an increase in demand that ultimately exceeds supply, and inflation is not soley linked to unemployment. We can see the fallacies...

  The Phillips curve does not fit with Austria's unemployment and inflation rates. The relationship is everywhere seemingly random and just happens to be what it is. A standard Phillips curve is an inverse exponential graph that is supposed to slope down. The higher the inflation the lower the unemployment and the lower the inflation the higher the unemployment. Austria’s inflation-to-unemployment graph does not follow the Phillips curve at all; the unemployment and inflation rates tend to just go wherever they feel like it and do not correctly reflect at all what the “correct” pattern should be. Sometimes unemployment is high while the inflation rate is high.  The thing that most disagrees with the phillips curve is the very far right point on the graph which has the highest unemployment and the highest inflation. There are some years where the phillips curve does somewhat hold true however there are only four points that appear to conform with the curve so this curve in my o...

  My data absolutely does not follow the phillips curve. The data makes the phillips curve look almost obnoxiously wrong. Spain does have significant problems when it comes to inflation and unemployment, so it is possible that this curve would work in an environment such as the USA, but here it looks to be incredibly far off. The trend that we see is high inflation with lowering levels of unemployment circling into high unemployment and lowering inflation. Though, unemployment can compare on a global scale, inflation at the lowest being 14% is ridiculously high.  The only rational explanation that I can think of in this moment in time is that Spain might be importing too much of its goods. That would be a reason why the prices are always inflating by so much and why unemployment is always shifting - it just has to do with their trade treaties with other countries. Other than that I am struggling to think of a reason for such a circular shaped graph. What is intriguing is the f...

                                                                                   Netherlands Phillips Curve The Netherlands Inflation Rate vs. Unemployment rate does not fit the Phillips curve. The only portion of the curve that slightly resembles it would be the line from unemployment rate of 0 to 6 (excluding the initial v shaped line that is from 4.25 to 0). In that portion of the graph the interest rate is decreasing while the unemployment rate is increasing. However, the rest of the graph does not represent a Phillips curve and doesn't show any inverse relation between unemployment and inflation. There are two periods of stagflation which is at the point where the inflation rate equals 2.5% and the unemployment rate is 5.8% and 7.2%. ...