The Phillips Corve NAIRU - Theory and Practice

The following study raises the question of an inverse relationship between inflation and unemployment, which constitutes a crucial issue connected with conducting economic policy of a country, particularly monetary policy. The concept of the Philips curve, which describes this relationship, has evolved considerably over the last forty five years. As a result of this evolution, the model of the Phillips curve has been expanded to encompass expectations as well, which in turn has led to the development of the NAIRU theory. On the basis of this theory it is possible to determine the real cost of disinflation in relation to the level of unemployment. The research results connected with the Philips curve and NAIRU in Poland which have been presented in the study show that there exists a considerable difficulty connected with estimating the parameters of the Phillips curve and, as a consequence, with the value of NAIRU. The reasons for these problems can be associated with the violent changes occurring in the Polish economy, particularly in the first half of the 1990s. In this connection, the attempts o f determining NAIRU are mainly based on the statistical data coming from the later period. The value of NAIRU in Poland in the years 1995-2002 is estimated at 12-16% - which is a level commonly regarded as high. Due to the limitations presented above an unequivocal evaluation of monetary policy based on the NAIRU theory seems to be impossible.Zadanie pt. „Digitalizacja i udostępnienie w Cyfrowym Repozytorium Uniwersytetu Łódzkiego kolekcji czasopism naukowych wydawanych przez Uniwersytet Łódzki” nr 885/P-DUN/2014 zostało dofinansowane ze środków MNiSW w ramach działalności upowszechniającej naukę