Monetary Economic: Phillips Curve

Phillips Curve
(Research Proposal)
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INTRODUCTION
Over the past years, the problem of unemployment and inflation has been a big issue discussed by Economists who major in monetary economics (Alisa, 2015). The approach began in 1958 when UK economists William Philips researched “the relationship that exists between the unemployment and inflation rates UK within 1861 to 1957” (Alisa, 2015). The empirical study is developed by a curve called the Philips curve; this curve provides the inverse relationship between unemployment and rapid inflation rates. Similarly, the lower the unemployment, the higher the inflation rate (Galí & Gambetti, 2019). This proposal suggests the implementation of the application of Philip’s technique of monetary economics in an economy. The research will also utilize the time series data to examine the Philips curve's existence in the economy.
This proposal aims To achieve the research objectives, and this proposal recommends the following areas of focus and goals;
* To estimate the cause of the nexus in the cases of lack of jobs and the economy’s inflation rates.
* We are finding out the nexus between the rates of inflation and unemployment for the past three years.
* To forecast the shock supplies that drive both unemployment and inflation in the long-run.
LITERATURE REVIEW
Some researchers have opposed the Philips hypothesis, claiming no off trading relationship between the two variables of employment and inflation and strongly opposed the curve propositions. In a varying scenario, it would be able to foretell the inflation and improve wages as first as possible; in that case, the unemployment and inflation rates would be high ; this is known as Lucas's critique (Walsh, 2017).
Philip's hypothesis on the US economic data of the US from 1950 to 1999 found the long-run cointegration relationship on inflation and unemployment rates. When a cointegration was applied to the industrial economies, a trade-off relationship was determined for the United States and Japan. This estimates points out the existence of the Philips curve in both long and short term runs.
Inflation and unemployment rates are the leading indicators of an economy (Walsh, 2017). Many scientists still discuss the interrelationships between them. Does this connection exist? How do these relationships affect each other? To answer the questions, we must analyze the works dedicated to this topic with research support from secondary data.
This research will consider the economic outlook of unemployment and the economists' inflation that outstand in the last century; the analysis of the unemployment and inflation in Russia is used in the analysis sections through an application of the graphs.
Figure 1: the inflation and unemployment Phillips graph
Source: International economics and business journal (Alisa, 2015)
However, the Philips research curve in Greece is restricted. During the extermination of the rational partisan model, a huge rate of inflating economy was noticed during the past two years; this attributed to involved political parties' situational failure to stabilize the economy. While the rat...