International Journal of Economics, Business and Management Research Vol. 6, No.10; 2022 ISSN: 2456-7760 www.ijebmr.com Page 1 Identifying Structural Break in the Phillips Curve for the Selected Countries: a Dummy Variable Approach Riduanul Mustafa 1 , Mohammed Saiful Islam 2 1 Department of Business Administration Bangladesh Army International University of Science and Technology, Bangladesh 2 Department of Economics, Chittagong University, Bangladesh doi: 10.51505/ IJEBMR.2022.61001 URL: https://doi.org/10.51505/IJEBMR.2022.61001 Abstract This paper aims to examine any time depending variation for the trade-off between unemployment and inflation to realize the presence of any structural break in the trade-off. Our previous study confirms that there is a negative relationship between unemployment and inflation in the long run for USA, Germany and France. This trade-off is known as “Phillips Curve”. The Graphical study indicates that there could be some structural break in the trade-off for each of the countries. It indicating that the Trade-off does not follows a constant pattern over time. For this reason dummy variable has been introduced in the model. For USA and France incorporating dummy variable showed significant change in the pattern of the trade-off whether for Germany the dummy variable has not given any noticeable change, indicating that there is a time variation in the trade-off of USA and France. Keywords: unemployment, inflation, Phillips curve, OLS, ordinary least square, dummy variable. 1. Introduction The person who is first to introduce the Phillips to public were A.W. Phillips through a single equation model which relates wage to unemployment.(Phillips, 1958). He has created a scattered diagram for this two variable model for UK between1861-1957. Phillips curve is based on three main assumptions. The core assumption is there is a trade-off between unemployment and inflation in the short run. Due to aggregate supply shock there could be a violation in the properties of a Phillips curve as it can bring both unemployment and inflation at the same point of time. The final assumption is that, there is no trade-off in the long run(McConnell, 2005).That is why economists are always keen to know about the unemployment inflation relationship and their pattern. In this regard it has been also seen in many studies that there is short run trade-off between inflation and unemployment in different countries in different time periods. Though, the rate of low inflation and low unemployment are major economic goals. But it is not possible to achieve both of the economic goals (low inflation and low unemployment) simultaneously. Inflation is the function of monetary policy while unemployment is the function of fiscal policy. The aim of monetary policy is to control the level of inflation or to maintain the sustainable inflation in the economy by sacrificing employment. In contrast the goal of fiscal policy is to make low unemployment in the economy at any rate of inflation. Therefore, coordination among