Research On Adaptability And Practicatity Of The Phillips Curve In China

A·W·Phillips, an economist of New Zealand, reveals a negative correlation between the change of monetary wage rates and the unemployment rate in his paper, named《the relationship between British unemployment rate and the change of monetary wage rates from 1861 to 1957》.Then it found that, the price of products depends only on the cost and the cost is mainly decided by the workers'wage with the unchanged profit in the short term, from the research of Samuelson and Solo. Therefore the change of monetary wage rates could be replaced by the Inflation rate, which resulted in the form of Phillips curve,reflecting the reverse relationship between the unemployment rate and the inflation rate.The form of the Phillips curve theory is based on the assumption of one economy structure for western developed countries. However, there is a dual economy in China where being in the transition. And under that dual economy structure, there is the situation with a lot of surplus labor transfer. By introducing a variable of labor transfer rate, this paper studies the correlation among the inflation rate, the unemployment rate of the non-agricultural sector and the labor transfer rate. Thus it provides a new perspective for the study of Phillips curve in China with dual economy structure.Finally, this paper is from the economic reality of China's transition to construct our "Phillips curve" micro-foundation, to launch its theoretical model accordingly, and to test the establishment situations in China of several Philips curve model under the standard of developed countries by using single-equation econometric model. The results showed that: the early Phillips curve relationship does not exist significantly in China; additional expected Phillips curve relationship also does not exist significantly in China; labor transfer rate expected is the important variable, which has China facts in the Phillips curve.