The following gures show the relationship between the unemployment rate and CPI ination for the US in two dierent historical periods:

The third gure provides estimates of the US Phillips curve coecient in 1981-2018:

Briey interpret these graphs. Oer some possible explanations why the slope of the regression line in gure 1 is steeper than the slope of the regression line in gure 2 and why the Phillips curve coecient in gure 3 has fallen (in absolute terms) since its low in 1995. What does the Australian experience look like and how does it compare to the US experience?

The details are in the figure

The following figures show the relationship between the unemployment rate and CPI inflation for the US in two different historical periods: Figure I Figure 2 1960 to 1983 1984 to 2002 CPI Cpl. -2- 4- 10 11 Unemployment rate (percent) Unemployment rate (percent) This figure provides estimates of the US Phillips curve coefficient in 1981-2018: Figure 3 Core PCE Phillips curve coefficient from 20-year rolling regressions 0.0 0.0 -0.1 -0.1 -0.2 -02 -0.3 03 -04 -04 -0.5 -05 -06 -05 -0.7 07 -08 -0.8 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 The first two figures are taken from "Can the Phillips Curve Help Forecast Infla- tion?" by Kevin Lansing (FRBSF Economic Letter, 2002) and figure 3 is taken from "Prospects for Inflation in a High Pressure Economy: Is the Phillips Curve Dead or Is It Just Hibernating?" by Peter Hooper, Frederic Mishkin, and Amir Sufi (NBER Working Paper, 25792, 2019). Briefly interpret these graphs. Offer some possible explanations why the slope of the regression line in figure 1 is steeper than the slope of the regression line in figure 2 and why the Phillips curve coefficient in figure 3 has fallen (in absolute terms) since its low in 1995. What does the Australian experience look like and how does it compare to the US experience? (15 points)