Is There a Long-Run Trade-Off between Inflation and Unemployment?

Bo Axell and Harald Lang
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Bo Axell: Research Institute of Industrial Economics (IFN)
Harald Lang: Research Institute of Industrial Economics (IFN)

No 150, Working Paper Series from Research Institute of Industrial Economics

Abstract: How are inflation and unemployment related in the long run? Are they negatively correlated, as in the so-called naive Phillips curve theories or uncorrelated, "as in the neo-liberals' view or are they positively correlated as Friedman suggested in his Nobel lecture? In this paper inflation is introduced into a general equilibrium search unemployment model. We show that it is possible to get either a negatively or a positively sloping long-run Phillips curve, all depending on the source of inflation.

Keywords: Unemployment; inflation; Phillips curve; general equilibrium (search for similar items in EconPapers)
JEL-codes: D50 E31 J64 (search for similar items in EconPapers)
Pages: 28 pages
Date: 1985-12
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0150

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