Inflation and Unemployment: Phillips Regularity in The EU
Inflation and Unemployment: Phillips Regularity in The EU

Summary/Abstract: This research paper is set to prove the hypothesis of the correlation between two particularly negative macroeconomic values - inflation and unemployment. The paper puts a particular emphasis on the importance, origins and genesis of the findings of Phillips. The analysis presents the dynamics and inflation-unemployment rates trade-offs in the EU for the period of 1998-2007. This period has been chosen for its relatively stable macroeconomic situation both in the EU and the world economies. Correlation and regression analyses have been conducted based on the available statistics. Through this procedure, the nature and intensity of the relation between inflation and unemployment have been determined. Statistical analyses indicated the existence of a negative linear relation between the phenomena and their moderate co-dependence. The results of the analysis confirm the premise that there is a regularity between the inflation-unemployment drift in the EU. Therefore, in the period observed here, the inflation rate had a certain effect on the unemployment rate drift. Finally, a Phillips curve has been made and thus the initial hyphothesis on the existence of Phillips regularity has been confirmed, that is, we have confirmed a moderate negative correlation between inflation and unemployment.

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