Philips Curve A comparison between UK and Australia

The Philips curve has emerged as an important macro-economic concept since it was presented in the 1950s. It offers policymakers a trade-off between inflation and unemployment. In its modern variation, expectations of inflation are also considered. Current inflation rates are also affected by its previous values. This paper looks for evidence of this trade-off in UK and Australia in the period 1989–2012 and checks for a deviation from actual unemployment and the natural rate of unemployment.