The recent turmoil in the financial markets, particularly the Silicon Valley Bank (SVB) event, has thrown the spotlight on the intricacies of economic models that govern our understanding of inflation, interest rates, and the overall health of the economy. The IS-LM-PC model, an integration of the IS-LM analysis with the Phillips curve, serves as a critical tool in deciphering these complex dynamics.
In the intricate ballet of macroeconomics, few concepts have been as captivating and as debated as the Phillips Curve. Named after economist A.W. Phillips, this curve purports to illustrate an inverse relationship between unemployment and inflation. Today, we delve into its origins, its evolution, and its relevance in the modern economic landscape.