Newer versions of it take into account supply shocks, especially after the OPEC oil crisis of the 1970's.
Newer versions of it take into account supply shocks, especially after the OPEC oil crisis of the 1970's. Among its assumptions is that one of its variables has inertia unless some outside factor acts to stop it. A major theoretical challenge to it came from Milton Friedman and Ed Phelps, and another practical objection from Robert Lucas and his school of rational expectations, which argued that using its conclusions to make policy would be counteracted by expectation of outcome. While it showed a trend during the 1960's and early 1970's, data from the late 70s and 90s denies the structural linkage between its two variables, and the resulting tradeoff. FTP, name this tool of Keynesian economists, a curve that shows a relationship between inflation and unemployment.
Newer versions of it take into account supply shocks, especially after the OPEC oil crisis of the 1970's.
{Phillips} Curve