Why is the Phillips curve important?

The Phillips curve is used by Central banks to forecast the inflation when the rate of unemployment falls. The Phillips curve was a concept used to guide macroeconomic policy in the 20th century. You can read about the Inflation in Economy- Types of Inflation, Inflation Remedies [UPSC Notes] in the given link.

The Phillips curve suggests policymakers have a choice between prioritising unemployment or inflation.

Further readings:

  1. Inflation Targeting: Methods, Drawbacks and Benefits
  2. Indian Economy Notes For UPSC Exam [Download PDFs]

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