Estimating the Phillips Curve in Iran, a Comparative Method

Abstract

Nowadays, the relationship between inflation and unemployment is known as the Phillips curve. Since this curve is an important indicator of the economic relationship between the unemployment and inflation, much attention has been paid to it. Phillips showed an inverse relationship between unemployment and wage rates being paid, so that the decline in the unemployment rate leads to an increase in wage rates or prices. In this study, we estimate the Phillips curve for inflation and unemployment rates in Iran by using a time series data from 1996-2012 and by using comparative method. We conclude that this model can be either logarithmic – linear or linear- logarithmic best model to the Phillips curve in Iran.