Definition of Phillips curve
: a graphic representation of the relation between inflation and unemployment which indicates that as the rate of either increases the rate of the other declines
Love words? You must — there are over 200,000 words in our free online dictionary, but you are looking for one that’s only in the Merriam-Webster Unabridged Dictionary.
Start your free trial today and get unlimited access to America's largest dictionary, with:
- More than 250,000 words that aren't in our free dictionary
- Expanded definitions, etymologies, and usage notes
- Advanced search features
- Ad free!
Origin and Etymology of phillips curve
after A.W.H. Phillips †1975 British (New Zealand-born) economist
First Known Use: 1959See Words from the same year
Financial Definition of PHILLIPS CURVE
What It Is
How It Works
Phillips posits that low levels of unemployment lead to higher prices. As more people become employed, wage levels increase. Broad increases in wages lead to higher demand for goods and services. This upward shift in demand results in higher prices (also called demand-pull inflation).
Why It Matters
The Phillips curve comprises two economic variables which monetary policy-makers are responsible for maintaining at low levels: unemployment and inflation. The inverse nature of the Phillips curve shows that maintaining a low level in either one leads to a likely increase in the other. For this reason, monetary strategists and policy-makers need to strike an effective balance between inflation and unemployment.
Seen and Heard
What made you want to look up Phillips curve? Please tell us where you read or heard it (including the quote, if possible).