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How has the Philipps curve developed in the 21st century in Sweden and what are the possible reasons behind this development?

Söderpalm, Axel LU (2024) NEKN01 20241
Department of Economics
Abstract
This thesis investigates the development of the Philipps curve in the 21st century, with focus on Sweden in comparison to Germany and the USA. Using a VAR model with impulse response functions the study analyses if the classic inverse relationship between unemployment and inflation is accurate or has weakened over time. The findings suggest that the traditional negative relationship appears to have generally weakened, with no statistically significant correlation found in any of the observed periods 2000-2011 and 2011-2022.
This aligns with recent literature indicating that the Philipps curve may no longer be a reliable tool for monetary policy. Factors such as globalization and technological advancements are found as potential... (More)
This thesis investigates the development of the Philipps curve in the 21st century, with focus on Sweden in comparison to Germany and the USA. Using a VAR model with impulse response functions the study analyses if the classic inverse relationship between unemployment and inflation is accurate or has weakened over time. The findings suggest that the traditional negative relationship appears to have generally weakened, with no statistically significant correlation found in any of the observed periods 2000-2011 and 2011-2022.
This aligns with recent literature indicating that the Philipps curve may no longer be a reliable tool for monetary policy. Factors such as globalization and technological advancements are found as potential contributors to this weak relationship today. The results highlight the potential limitations with this model in today ́s complex global economies and suggest caution in using it as a tool for monetary policy. Further research is recommended to better understand this potential shift and its extent in modern economies. (Less)
Please use this url to cite or link to this publication:
author
Söderpalm, Axel LU
supervisor
organization
course
NEKN01 20241
year
type
H1 - Master's Degree (One Year)
subject
keywords
Philipps curve, globalization, monetary policy, inflation
language
English
id
9173116
date added to LUP
2024-10-01 13:09:18
date last changed
2024-10-01 13:09:18
@misc{9173116,
  abstract     = {{This thesis investigates the development of the Philipps curve in the 21st century, with focus on Sweden in comparison to Germany and the USA. Using a VAR model with impulse response functions the study analyses if the classic inverse relationship between unemployment and inflation is accurate or has weakened over time. The findings suggest that the traditional negative relationship appears to have generally weakened, with no statistically significant correlation found in any of the observed periods 2000-2011 and 2011-2022.
This aligns with recent literature indicating that the Philipps curve may no longer be a reliable tool for monetary policy. Factors such as globalization and technological advancements are found as potential contributors to this weak relationship today. The results highlight the potential limitations with this model in today ́s complex global economies and suggest caution in using it as a tool for monetary policy. Further research is recommended to better understand this potential shift and its extent in modern economies.}},
  author       = {{Söderpalm, Axel}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{How has the Philipps curve developed in the 21st century in Sweden and what are the possible reasons behind this development?}},
  year         = {{2024}},
}