The Phillips Curve Is Alive and Well

by Jeffrey C. Fuhrer
March/April 1995

Rumors of the death of the Phillips curve appear to have been greatly exaggerated. In fact, the Phillips curve is alive and well, and living in a good number of (although certainly not all) widely used macroeconometric models. The author takes the view that the primary reason for its longevity is that the Phillips curve has been an extremely robust empirical relationship, showing little or no sign of instability over the past 35 years.

He examines an array of empiracal evidence and finds that the Phillips curve has exhibited remarkable stability, even across data for what must be the most dramatic shift in monetary policy regime since World War II. To outward appearances, at leasat, the Phillips curve is as structural a relationship as macroeconomists have ever had at their disposal.

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