
How the Phillips Curve is useful to investors?
Given the unemployment rate and any major exogenous variables, investors can use the Phillips curve principle to estimate where inflation might go in the short or long term. Knowing that inflation has an inverse relationship with unemployment in the short term but has no relationship at all in the long term can help assess various potential ways to structure one's investment portfolio in an inflationary environment. Furthermore, as inflation figures are released, it can assist investors in forecasting future interest rate changes.
Nov 02, 2022 00:26