The Washington Post

We’re turning Japanese, I think we’re turning Japanese: This scatterplot sure seems to think so.

Economists care a lot about unemployment. And they care a lot about inflation. So much so, in fact, that for years they were really into this thing called the Phillips curve, which has unemployment on the X axis and (wait for it) inflation on the Y axis. Most of time, there's at least a short-term tradeoff between the two: If you let inflation go a bit higher, you could get lower unemployment, and vice versa.

But the experience of stagflation in the 1970s — where both unemployment and inflation were quite high — made a lot of economists skeptical of the relationship, though many people still find value in it, and it's made a bit of a comeback in revised "New Keynesian" form (see, for example, Galí and Gertler's version).

All that intellectual history is just prelude to the biggest development in Phillips curve research, which comes in a new-to-me paper by Gregor Smith at Queen's University, which looks at the curve for Japan between 1980 and 2005. Here's what happens when you plot the unemployment rate multiplied by -1 against inflation:

(Chart by Gregor Smith)

Now look at a map of Japan:

(Map via Gregor Smith)

Haters may try to deny the realness of the relationship here with complaints like, "that's just a coincidence" and "why would you plot it against the unemployment rate multiplied by -1? why not just the unemployment rate?" These people are unwilling to see the clear empirical relationship before their eyes. More striking still, it appears that New Zealand's Phillips Curve ...

... looks not, you know, totally dissimilar to New Zealand.


France, by contrast, appears to defy the trend. Its Phillips curve ...


... doesn't really resemble the trademark pentagonal dimensions of Gaul.


More research is clearly needed into the geographic determinants of Phillips Curves. Thanks to Josh Freedman for alerting me to this important relationship.



Success! Check your inbox for details. You might also like:

Please enter a valid email address

See all newsletters

Show Comments
Most Read



Success! Check your inbox for details.

See all newsletters

Your Three. Videos curated for you.
Play Videos
How to make Sean Brock's 'Heritage' cornbread
New limbs for Pakistani soldiers
The signature dish of Charleston, S.C.
Play Videos
Why seasonal allergies make you miserable
John Lewis, 'Marv the Barb' and the politics of barber shops
What you need to know about filming the police
Play Videos
The Post taste tests Pizza Hut's new hot dog pizza
5 tips for using your thermostat
Michael Bolton's cinematic serenade to Detroit
Play Videos
Full disclosure: 3 bedrooms, 2 baths, 1 ghoul
Pandas, from birth to milk to mom
The signature drink of New Orleans
Next Story
Dylan Matthews · August 10, 2013

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.