I stumbled across this articlethis article the other day as I was looking for information on EU unemployment numbers. One could assume that the disinflation and rising unemployment numbers in the EU are connected.
Though the Phillips Curve is not a perfect tool it is still taught in many economic curriculums as it shows an inverse relationship between inflation and unemployment. In the Euro zone we can see just that, not that I could say for certain that its causation or correlation, but for purposes of teaching the PC it will do just fine. The bit at the end about interest rate cuts is a nice movement into monetary policy to boot. (mirrored Japan Phillips Curve included just for fun)
Maybe a good lead in to the Lucas critique?
ReplyDeleteThanks for the lead. I'd read Goodhart's, but not Lucas. Might be fun to talk about.
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