The State of the Phillips Curve

The Czech Economic Association, in co-operation with the Czech National Bank, organised a public seminar on "The State of the Phillips Curve," which featured a lecture by Professor Laurence Ball, in Prague in April 2001. Professor Ball, a professor of economics at John Hopkins University, began with a historical description of the Phillips curve and approach. He then dealt with the existence of the micro-foundation in the Phillips curve approach to invalidate the Lucas critique. Next, Professor Ball described the varying national experiences of the US and several EU countries, basing his explanation for the latter on the principle of hysteresis. Professor Ball concluded the lecture by providing several reasons as to why hysteresis occurs in the labour market.