The Phillip Curve Analysis

Alban William Housego Phillips, a New Zealand born world renowned economist turns 101 years old this month (born on 18th November 1914). The Phillip Curve was published by him in 1958 as a case for monetary neutrality shown in negative, which still holds good for research work in macroeconomics and review of monetary policies for relevant agencies across the world. The Phillip Curve formed the basis for explaining that money might just not be neutral as largely believed by economists. It is popularly yet implicitly understood that decisions taken during economic policies are influenced by the fact that economic growth is fuelled and unemployment level brought down, while implicitly a robust growth can actually lead to high inflation (Lacker and Weinberg, 2007). In all these years there have been numerous debates, research work and published journals that have explored alternative views on the subject. Even in the current context all macroeconomists and policy makers extensively base their views related to the shape, type and stability of Phillips curve.
Quite understandably, a swift growth trajectory for a country is often attributed to exhaustive use of the available economic resources and subsequent fall in the unemployment numbers. This translates into higher inflation, which in turn means that in order to reduce inflation the economy has to deal with a higher number of unemployed populations. On the contrary, the recent cases of enhanced level of economic bustle combined with lower inflation numbers as witnessed in a number of nations, have generated serious reservations on the application of the traditional Phillips curve, which was always considered as a classic theory of inflation