Dhaka, Jan. 28 -- In simple terms, the Phillips Curve proposes a trade-off: when an economy grows rapidly and jobs become plentiful, prices tend to rise faster; when unemployment is high, inflation tends to slow. In other words, a country may tolerate some inflation to achieve more employment or accept higher unemployment to stabilize prices. Developed in the context of relatively well-functioning market economies, this idea once shaped how governments thought about growth, inflation, and stabilization policy.

The Phillips Curve was never conceived as a mathematical law. It began as an empirical observation-a mid-20th-century British pattern linking unemployment to wage growth under specific institutional conditions. Only later was this ...