The Phillips-Elgazzar Curve Enhanced with Optimal Rates of Unemployment and Inflation for Treating Stagflation in High, middle and low income countries
Year: 2026
Type: article
Abstract: The Phillips curve has gone through several phases since 1958, from the traditional Phillips curve and the inverse relationship between unemployment and inflation, to the Friedman-Phillips curve and the natural rate of unemployment hypothesis, then the Phillips curve enhanced with inflation expectations, until it reached the Phillips-Elgazzar curve in 2026, enhanced with optimal rates of unemployment and inflation. Upon reaching this point, we can say goodbye to stagflation, which has been present in some countries.The main idea of the Phillips-Elgazzar Curve is to identify optimal rates of unemployment and inflation and use them as a treatment tool. These rates act as inflection points; before these rates, there is a negative correlation between unemployment and inflation, thus preventing stagflation. This results in what can be metaphorically called a revival of the Phillips-Butcher Curve, enhanced by the optimal rates of unemployment and inflation. After these rates, a positive correlation occurs between unemployment and inflation, leading to stagflation. The core idea of the Phillips-Butcher Curve is to break the cycle of stagflation and transform it into a problem of either unemployment or inflation alone, which is easier to manage using appropriate economic policies—fiscal, monetary, or otherwise—without conflict or a direct correlation between decreases in both. This signifies the end of stagflation. This is achieved by finding optimal unemployment and inflation rates, which represent inflection points in the relationship between unemployment and inflation. At this point, the relationship between unemployment and inflation becomes non-linear.
Author: فاروق فتحى السيد الجزار
Language: Arabic
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7222867980