Re: phillips curve about japan and deflation......

On Mar 3, 3:42 pm, zhen <wangzhen0...@[EMAIL PROTECTED]
> wrote:
> Hi everyone:
>
> I have a question concern about the economy of Japan.
>
>  * Whether the short run phillips curve can well explain the relation
> between unemployment and inflation rate during the last 30 years?
>

No and yes. The traditional Phillips curve falls apart over the last
30 years. However, the expectations augmented Phillips curve works
well. This says that expected inflation matters so if inflation rates
have been high and are expected to be high the curve ****fts upward.
Each unemployment level is associated with more inflation. As was
shown in the US in the late 1990's when expected inflation drops the
Phillips curve ****fts down. The Fed was able to change inflation from
4% to 2% with no increase in unemployment.