Unstable Phillips Curve Challenges Traditional Economic Decision-Making
The Phillips Curve, which shows the relationship between inflation and employment, is often used in economics debates. One key factor in this curve is the labor supply, which is usually thought to be positive. However, the labor supply can actually be positive, negative, vertical, or even horizontal. This variability in the labor supply curve can cause the Phillips Curve to be unstable, making decisions based on it unreliable.