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Abstract
The Phillips curve is an important component of macroeconomics that provides a structural equation. This equation determines the rate of inflation as a function of the rate of unemployment. In fact, the Phillips curve is an inverse relation between the rate of unemployment and the rate of inflation. This equation represents an important constrain on monetary policy, because it determines the set of sustainable inflation-unemployment outcomes. For many years economists assert the existence of a negative correlation between inflation, on the one hand, and unemployment rate in the economy, on the other hand. In other words, high levels of unemployment are associated with low levels of inflation and vice versa. In this paper we propose to analyze the evolution of Phillips curve in some Eastern European countries. The evolution of inflation and unemployment in Europe brings out three features: a reduction in inflationary expectations, large falls in the structural unemployment rate that determine a flatter Phillips curve.
KEYWORDS: inflation, Philips curve, unemployment rate
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1. Introduction
1.1. The Origin of Phillips Curve The national economy is the fundamental framework for development and economical-social assertion of people. Regarding these economies a whole well defined, whose development involves the optimal economic reports, we can't neglect monetary phenomena, because the currency is itself an important entity. Therefore phenomena are inflation and unemployment, complex and socio-economic phenomena with various aspects become persistent everywhere in the world. Basically, there is no economic mechanism that these phenomena do not affect. "There is always a temporary compromise between inflation and unemployment; there is not a permanent compromise Temporary compromise is not from proper inflation, but from unanticipated inflation, ie inflation rates increases " (M ilton Friedman).
Two of the most important issues facing a modem state, especially in the transition period (ie, the transition from a centralized economy to a market economy) are representated by inflation and unemployment.
Inflation is a problem that is in attention of all countries, faced with this process - throughout histoiy, as it was and remained the most controversial and complex contemporary issue. The inflationary process appeared before economic science, but inflation theory was shaped much later. Contemporaiy inflation is a monetary - real imbalance expressing money in circulation that...