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A Generalization of the Phillips Curve
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 109 (1989), Iss. 1 : pp. 19–47
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Breuss, Fritz
Abstract
The Phillips curve has many interpretations. Either it offers a stable enduring inflation unemployment trade-off (this was the belief of the earlier proponents) or it offers no trade-off at all (this is the folklore of the "New Classical" macroeconomics). The "stylized facts" approach to modern business cycle analysis is used to generalize the Phillips curve. This model is able to map all possible patterns of the empirical curve and, hence, is also open to all theoretical interpretation ("Phillips possibility curve"). The so-called Lucas supply function is derived as a special case of the generalized Phillips curve.