Estimation of the Phillips curve in Iran: A new perspective

The relationship between inflation and unemployment which is known as the "Phillips curve" in economic literature created long history of debate among different schools of thought. In this article, based on the idea of rational as well as adaptive expectations, we examine this relationship in the Iranian economy for the periods 1959-2004. Here, by using the moving average method within the context of the above two mentioned perspectives and by using a "complex index" method as a measure of the supply shocks, the Iranian economy will be evaluated.
The results illustrate that adaptive expectations works. In other words, it verifies that there should be an inverse relationship between inflation and unemployment in the short run, although the long run trade-off between these two indicators of the well being of the economy will be vanished.
JEL Calssicification: E31, E24, C32, E52