Russell Paul Chuderewicz, Thesis Supervisor Russell Paul Chuderewicz, Thesis Honors Advisor James R. Tybout, Faculty Reader
Keywords:
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Abstract:
In this paper, the core objective was to analyze and break down the components of the Phillips Curve. By doing so, two questions could be answered: has the Phillips Curve gone dormant and if so, is a potential cause a breakdown of assumed causal links between wage inflation, unemployment, and price inflation. Imploring a variety of methodologies including vector error correction models, vector autoregressive models, and granger causality, this paper was able to examine each relation of the Phillips Curve and provide insight into the strength of its components. Specifically, the Wage Phillips Curve still shows a significant relationship between unemployment and wages, and there is also a significant, positive relationship between the inflations of prices and wages. However, there is little evidence that a relationship exists between price inflation and unemployment, demonstrating the weakness of the conceptual Phillips Curve.
