The Phillips curve relationship has subsequently been challenged both from theoretical and empirical standpoints. The downward slope of the curve arises basically because of the presence of money illusion and expected inflation deviating from actual inflation. 11. At present the controversy is centred around the possible short-run and long-run ‘trade-off’ between inflation and unemployment.
Promising work on measuring systemic risk is, in fact, now in progress – at international institutions such as the IMF, the Basel Committee for Banking Supervision and the Financial Stability Board; in central banks and other systemic risk regulators; and in the academic world; indeed in each of the institutions which all of us collected here today represent.