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Interesting Phillips Curve

I saw this on the Tutor2u blog. Remember the Phillips Curve (named after New Zealander Bill Phillips) relates the level of unemployment to the rate of change of money wage rates (which are a proxy for inflation). If you look at Japan’s Phillips Curve from January 1980 to August 2005 we get the graph to the right. You can see the trade-off between unemployment and inflation – ie high inflation low unemployment and vice-versa.

However, Gregor Smith of Queen’s University Canada, found out that if you rotate the Phillips Curve around the vertical axis so that minus unemployment is now on the horizontal axis you see a map of Japan. Who said economics is a dull science.

  1. Robin Watkins
    March 30, 2011 at 9:05 pm

    Phillips Curve.

    There is a misunderstanding of the word Science here. Economics is not science.

    Apparently a US President ( name forgotten) said: give me an economist with one arm. Why? Because an Economist will answer a question: on this hand, but on the other hand.. So please, Science belongs to the realms of mainly Physics.

  2. March 30, 2011 at 11:11 pm

    Fair comment – should really be called a Social Science not an exact science. Harry Truman was the American President

  3. Emilio Odescalchi
    April 6, 2011 at 9:15 pm

    Economy can become a sort of science, should one apply to social-economics systems concepts ,formulas indicators such entropy, f.i. Europe is a system with high entropy,China & India Low entropy. Thermodynamics laws regulate supply-demand systems. Stagflation is a sign of high entropy.
    Please referto studies on the subject under Economic Systems, Entropy.
    Unfortunately but true ware restore low-entropy in systems, moreover give strong impulse to technology revolutions: think of volumetric turbochargers adopted in WW1….

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