The Phillips curve is an economic model, named after William Phillips, that predicts a correlation between reduction in unemployment and increased rates of wage rises within an economy.[1]
While there is a short-run tradeoff between unemployment and inflation, it has not been observed in the long run.[5] In 1967 and 1968, Friedman and Phelps asserted that the Phillips curve was only applicable in the short run and that, in the long run, inflationary policies would not decrease unemployment.[2][3][4][6] Friedman then correctly predicted that in the 1973–75 recession, both inflation and unemployment would increase.[6][failed verification] In the 2010s[7] the slope of the Phillips curve appears to have declined and there has been controversy over the usefulness of the Phillips curve in predicting inflation. A 2022 study found that the slope of the Phillips curve is small and was small even during the early 1980s.[8]
Most economists no longer use the Phillips curve in its original form because it was shown to be too simplistic.[16] This can be seen in a cursory analysis of US inflation and unemployment data from 1953–92.
It would seem economists would agree that the Phillips curve is simply a model and not some oracle of economic forecasting. If you take take simplified economic models out of context and ignore the whole empirical side of economics, then of course you can portray it as pseudoscience. You can portray anything as pseudoscience if you reduce it to its abstract, outdated models devoid of context.
People on the internet being mad that inflation is going down to normal levels instead of prices dropping is turning me into the “learn basic economics 🤓” guy and I hate it. Like if you guys are complaining about having crushing student debt, you really don’t want deflation.
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