Phillips Curve – Do Real Data Confirm? The Phillips Curve purports to show a stable relationship between the rate of inflation and the unemployment rate. Plot the data points between inflation and unemployment over the past decade to present in the following manner. For inflation data first use the Consumer Price Index – All Urban Consumers then the Producer Price Index – All Commodities. For unemployment data first use Unemployment Rate – Civilian Labor Force then use data form your population group (e.g. Unemployment Rate – Civilian Labor Force 20 Years and Over Male). Do any of your data point plots seem to confirm the Phillips Curve concept? Retrieve Unemployment data from the Bureau of Labor Statistics http:// stats.bls.gov/cpshome.htm and select Most Requested Series. For inflation data go to http://stats.bls.gov/cpihome.htm and select Most Requested Series.

The Laffer Curve – Does It Really Exist? The Laffer Curve suggests that beyond some point higher tax rates will result in lower tax revenues. Over the past 60 years the marginal income tax rates have varied widely with the top rate exceeding 90 percent in the 1940’s and falling to under 30 percent in the 1980’s. This would imply that personal income taxes as a percentage of gross domestic output would also vary widely. Visit the U.S. Commerce Department http://www.doc.gov/ andsearch for 1998 Budget Historical Table (or the latest year instead of 1998) for the document titled Tax Receipts by Source as a Percentage of GDP. At present individual income taxes are what percentage of GDP? How has the percent varied over the past 60 years? Does this support the Laffer Curve?