Phillips Curve and AS

Phillips Curve

_w/w = ñ h _ (U ñ Un)

Implication: When U > Un, i.e., Y < Yn w _, AS shifts in

Expectations Augmented Phillips Curve

_w/w ñ _e = ñ h _ (U ñ Un)

or

_w/w = ñ h _ (U ñ Un) + _e

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