Title:
Identifying Structural Break in the Phillips Curve for the Selected Countries: a Dummy Variable Approach

Authors:
Riduanul Mustafa, Mohammed Saiful Islam, Bangladesh

Abstract:

This paper aims to examine any time depending variation for the trade-off between unemployment and inflation to realize the presence of any structural break in the trade-off. Our previous study confirms that there is a negative relationship between unemployment and inflation in the long run for USA, Germany and France. This trade-off is known as “Phillips Curve”. The Graphical study indicates that there could be some structural break in the trade-off for each of the countries. It indicating that the Trade-off does not follows a constant pattern over time. For this reason dummy variable has been introduced in the model. For USA and France incorporating dummy variable showed significant change in the pattern of the trade-off whether for Germany the dummy variable has not given any noticeable change, indicating that there is a time variation in the trade-off of USA and France.

DOI: https://doi.org/10.51505/IJEBMR.2022.61001