Hossein Amiri, Dr Ebrahim Gorji,
Volume 2, Issue 3 (3-2011)
Abstract
The Phillips curve usually has been estimated in a linear framework which implies a stable constant relationship between inflation and unemployment. Some of the studies claim that the slope of the Phillips curve is a function of macroeconomic conditions and also the relationship is asymmetric. This article deals with a smooth transition regression model for relationship between inflation and unemployment for Iran, during the period of 1971 -2007. Smooth transition regression model is a non linear time series regression model which could be considered as developed form of regime switching regression model. Results show that there is a negative and nonlinear relationship between inflation and unemployment in short-term. Regarding this result it's highly important for policy makers to be able to make a relationship between these two variables
