PHILLIPS EĞRİSİ : ENFLASYON-İŞSİZLİK DEĞİŞ-TOKUŞU TEORİK BİR İNCELEME

The Inflation-unemployment trade-off shown by the Phillips curve being originally the product of an empirical study of A.W.H. Phillips in 1958, is accepted as one of the essential principles of economics. Today, there is a broad consensus among economists on the fact that there is not a long-term relationship between inflation and unemployment but a short-term relationship exists. It is not possible to understand the business cycles, and in particular the short-term effects of monetary policy, unless we accept the existence of a short-term trade-off between inflation and unemployment. Because the inflation-unemployment trade-off is, at its heart, a statement about the effects of moetary policy; it is the claim that changes in monetary policy push these two variables in opposite directions. There is a long tradition suggesting that such a trade-off exists and that it holds only in the short-term. In his 1752 essay ‘Of Money’, David Hume wrote that a monetary expansion first increases output and employment, and later increases the price level. Thus, it has been understood well centuries before that the relationship between inflation and unemployment is a basic element of business cycle theory. There is now a broad consensus that Hume was right: Monetary policy effects both nominal variables such as inflation and real variables such as unemployment; that is, money is not neutral in the short-term. On the other hand, the trade-off remains mysterious since the economists could not produce a satisfactory theory yet to explain it. In this study, we are dealing with the theories explaining the Phillips curve and inflation-unemployment trade-off. For this reason, the basic articles and models on the Phillips curve, inflation-unemployment trade-off and natural rate hypothesis are being analyzed. In this context, the original Phillips curve; the adaptive expectations augmented Phillips curve models of Friedman and Phelps; the rational expectations augmented Phillips curve models with the imperfect knowledge assumption of Lucas; and the approaches of new Keynesians based on nominal rigidities are being studied.