# Phillips Curve Calculator

URL: https://speedycalculator.com/calculators/finance/phillips-curve/
Last updated: 2026-10-25

> The Phillips curve calculator estimates inflation from expected inflation and the gap between actual and natural unemployment (the expectations-augmented Phillips curve), with an optional supply shock.

## Inputs

- Expected inflation (%)
- Actual unemployment rate (%)
- Natural unemployment rate (%)
- Slope (β)
- Supply shock (%)

## Results

- Predicted inflation
- Unemployment gap

## Formula

```
π = πᵉ − β × (u − uₙ) + supply shock
```

## Explanation

The original Phillips curve showed a trade-off between inflation and unemployment. After the 1970s stagflation, economists added inflation expectations: the trade-off holds only in the short run. The curve was very flat in the 2010s and steepened in 2021–22.

### How to use the Phillips Curve Calculator

- **Expected inflation**
- **Actual unemployment rate**
- **Natural unemployment rate**
- **Slope (β)**
- **Supply shock**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter expected inflation, the actual and natural unemployment rates, the slope β and any supply shock.

### Tips

- Use real (inflation-adjusted) figures to compare across years.
- Check whether data are seasonally adjusted.
- Use the same currency and base year throughout.
- Economic models simplify reality – treat results as illustrations, not forecasts.

### Common mistakes to avoid

- Mixing nominal and real values.
- Comparing percentage changes with percentage-point changes.
- Treating correlations as causes.

### Inputs explained

FieldWhat to enterExpected inflationIn %Actual unemployment rateIn %Natural unemployment rateIn %Slope (β)A numberSupply shockIn %

### What each result means

- **Predicted inflation** = [Expected inflation] - [Slope (β)]×([Actual unemployment rate] - [Natural unemployment rate]) + [Supply shock]
- **Unemployment gap** = [Actual unemployment rate] - [Natural unemployment rate]

### Example values

How the main result changes when **Expected inflation** changes and everything else stays at the example values above:

Expected inflation (%)Predicted inflation (%)1.251.51.882.132.52.753.133.383.75455.25

## Worked example

Inputs — Expected inflation: 2.5 %; Actual unemployment rate: 3.8 %; Natural unemployment rate: 4.3 %; Slope (β): 0.5; Supply shock: 0 %.

Results — **Predicted inflation = 2.75 %**; Unemployment gap = -0.5 %.

## FAQ

**What is the Phillips curve?**
The short-run trade-off between unemployment and inflation.

**Does the Phillips curve still hold?**
Loosely in the short run, especially when expectations are anchored.

**What is the expectations-augmented Phillips curve?**
Inflation depends on expected inflation and the unemployment gap.

**What formula does the Phillips Curve Calculator use?**
π = πᵉ − β × (u − uₙ) + supply shock.