Revalidating Phillips Curve in Indian Context

Current research tries to find out the empirical association of Inflation and Unemployment by validating the proposition of the Phillips curve in the Indian scenario. To check the operation of the Phillips curve in the current Indian economic situation the data of twenty-eight years i.e. 1992 to 2019, have been taken into consideration. To check the applicability of the already existing theory of the inverse relationship between jobless rate and inflation, researchers have applied Co-integration and Granger Causality Test. The findings of the research article conclude a long-run association between unemployment and inflation. Many studies do not confirm the long-run association between unemployment and inflation. The results of the study further confirm the short-run association between the said two variables. The study shows the direction of causality from inflation to unemployment but not from unemployment to inflation. This indirectly shows that unemployment cannot lead to inflation. So, the study has successfully validated the presence of the Phillips Curve in the Indian scenario.