The Phillips Curve Is a Relationship in Macroeconomics Between the Inflation

question 62

Essay

The Phillips curve is a relationship in macroeconomics between the inflation rate (inf)and the unemployment rate (ur).Estimating the Phillips curve using quarterly data for the United States from 1962:I to 1995:IV,you find = 4.08 + 0.118 urt,R2 = 0.003,SER = 3.148
(1.11)(0.176)
(a)Explain why,at first glance,this is a surprising result.
(b)Do you think that there is omitted variable bias in the regression?
(c)What other threats to internal validity may be present?
(d)If you could find a proper specification for the Phillips curve using United States data,what external validity criteria would you suggest?

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