Comparison between New-Keynsians Philips Curve and Standard Philips Curve for Economics of IRAN

Unemployment-inflation trade-off is known as Philips curve. This relationship was first defined for England economy by Professor Philips since 1958. Much development has been submitted by different economic schools about this innovation. In this paper, apart from dealing with the New-Keynesians Philips curve, the curve mentioned is estimated for Iranian economy. In addition, we are going to compare the result of this estimation with the result of other studies. The result shows that, in comparison with other standard models, New-Keynesians Philips curve is more corresponding with economic condition of Iran. Considering this matter, unemployment-inflation trade-off exists both in long-run and short-run, however, this relationship is weaker in the long-run and politicians can influence inflation and unemployment rate in the short-run and long-run by demand management policies, but this influence is weaker in the long-run.