All posts by Nirad Inamdar

Nirad Inamdar, Ph.D. Student Economics and Business Environment Nirad is a Ph.D. research student in Economics and Business Environment at the Indian Institute of Management (IIM). Before this, he completed his MBA with specializations in Marketing and Economics at the prestigious IIM. To complement his degrees, he has over seven years of valuable hands-on experience in the corporate sector through diverse functions like marketing, IT services consulting, sales support and business analysis. He lives in Mumbai and Delhi in India, which allows him to pursue his passion for business writing along with his academic pursuits.

The Phillips Curve Relevance in Indiana in the 21st Century

Nirad Inamdar

Nirad Inamdar, Ph.D. Student Economics and Business Environment

The Phillips curve is a mathematical study of the relationship between inflation and unemployment in an economy. We know that for any place or region — and consequently, for its government — some of the primary goals are:

  1. high Gross Domestic Product (GDP) per capita
  2. high trade deficit (more exports than imports)
  3. low percentage of below poverty line (BPL) families
  4. low unemployment
  5. low inflation, especially of essential goods

However, achieving all of these goals at once is the economic equivalent of Utopia. It requires a veritable balancing act to manage these goals because they are conflicting in nature. Every year, administrators face a trade-off. One of these is between inflation and unemployment. Intuitively, we understand that to reduce unemployment, the government gives incentives and creates more jobs. While this increases the GDP output, it also reduces the supply of labor in the market. Ironically, the reduction in the available workforce makes labor costly and wages increase. This causes inflation.

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