Publication

This paper introduces and tests the hypothesis that the relation between inflation and unemployment has been in many countries subject to a significant change in the early 1990s after the disinflation period. The authors argue that during that period, inflation and unemployment were the result of the struggle between the wage and price setters trying to influence the distribution of income to their favor and the Central Bank fighting against inflation. The authors use econometric methods to test whether a presumed break in the relation between inflation and unemployment can be shown to exist.