COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 1121

Testing the Standard View of the
Long-Run Unemployment-Inflation Relationship

Ray C. Fair

April 1996

The results in this paper, based on estimating and testing price equations for 30 countries, do not support the standard view of the long-run relationship between unemployment and inflation. They overwhelmingly reject the dynamics implied by the standard view. Wage equations are also estimated and tested. The paper also attempts to estimate the functional form of the relationship between measures of demand pressure and price and wage levels, but no strong conclusions emerge.