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1. Section 6-2 emphasized how the Phillips curve (sans inflationary expectations) broke down in the United States. You might ask yourselves, But does it hold in other countries? The goal of this exercise is to give you the chance to experiment with the data and try to find a country for which the Phillips curve might still hold. In order to do this, go to www.bls.gov and mouse over "International" under "Subject Areas." Click on "Foreign Labor Statistics." Using the "One-Screen Data Search" for "Labor force statistics, productivity and unit labor costs, consumer prices," choose a country and add the Consumer Price Index and the unemployment rate into the selection box (use the "Add To Your Selection" button instead of "Get Data" to put more than one series into the selection box.) Place the annual data for these two indicators into an EXCEL file. Calculate the inflation rate in the CPI and create a scatterplot that has the unemployment rate on the X axis and the inflation rate on the Y axis. Does your graph look anything like a Phillips curve? Try to do the same for another country. If you find a country for which it works, please let us know.
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