The Phillips curve in Australia

In this paper we discuss the development of Phillips curves in Australia ov er the forty years since Phillips first estimated one using Australian data . We examine the central issues faced by researchers estimating Australian Phillips curves. These include the distinction between the short- and long- run trade-offs between inflation and unemployment, and the changing level o f the non-accelerating inflation rate of unemployment (NAIRU), particularly in the 1970s. We estimate Phillips curves for prices and unit labour costs in Australia over the past three decades. These Phillips curves allow the NAIRU to change through time, and include a role for import prices and 'spe ed-limit' effects. The paper concludes by discussing the changing role of t he Phillips curve in the intellectual framework used to analyse inflation w ithin the Reserve Bank of Australia over the past three decades. (C) 1999 E lsevier Science B.V. All rights reserved.