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Phillips Curve

Short-run inverse relationship between inflation and unemployment.

Lower unemployment tends to push wages and inflation up, and vice versa — a tradeoff policymakers historically exploited. The relationship breaks down in the long run (the vertical long-run Phillips curve) and during supply shocks (stagflation).

import statsmodels.api as sm
X = sm.add_constant(df["unemployment"])
model = sm.OLS(df["inflation"], X).fit()
print(model.params)   # negative slope = the tradeoff