Phillips Curve Calculator
Explore the inverse relationship between unemployment and inflation using the expectations-augmented Phillips Curve.
To analyze the Phillips Curve relationship:
Step 1: Enter the expected inflation rate.
Step 2: Enter the current unemployment rate and the Natural Rate of Unemployment (NAIRU).
Step 3: Adjust the sensitivity coefficient (b) if needed.
Step 4: The predicted inflation rate is calculated in real-time.
The calculator uses the expectations-augmented Phillips Curve: Inflation = Expected Inflation - b × (Unemployment - Natural Rate). This formula accounts for both demand-pull factors and inflation expectations.
The Phillips Curve is a cornerstone of macroeconomics, first proposed by A.W. Phillips. While the short-run curve shows a trade-off between inflation and unemployment, the 'Long-Run Phillips Curve' is typically vertical at the natural rate of unemployment.
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