For anyone actually hoping to apply this, a simplified version of the Philips Curve can be
approximated using the following
function:
f(x) = % change in
unemployment rate
f(x) = (-1/2)((Change in
GDP)/(
GDP)-4)
This assumes that unemployment will be relatively steady when GDP growth is about 4%. A perfect example of this is Canada in 2001. GDP grew by 4.0% annually and unemployment grew to 7.6% from 7.4%.
Obviously, this is just a
rule of thumb. Interestingly, though, a great many
political and
diplomatic decisions are made on the basis of simple ‘
back of the napkin’ calculations like this.