Knowledge of the relationship between two phenomena (inflation and unemployment) is crucial to any economic and political decision-making process. An investigation of this relationship helps economists and policymakers to be aware of the economy’s performance. In the present research, New-Keynesians’ Philips hybrid CURVE has been derived by using the pricing models and the assumption of price and wage rigidity. Friedman- Phelps Philips CURVE and New-Keynesian Philips CURVE are special types of New-Keynesian Hybrid Philips CURVEs. The model used for rigidity of prices and wages in this article is pricing model of callow. Then, we have estimated this CURVE for Iranian economy for the time 1975-2007 by using GMM method.The results indicate that the firms have both backward and forward looking considerations in setting their prices.

Gradual adjustment of nominal wages and prices is the basis of New Keynesian models. The survey of microeconomic bases of slow adjustment is necessary for the welfare analysis.The reasons for incomplete adjustment of nominal wages and prices are the uncertainty, cost information, and re- negotiations. Note that the correct relationship between inflation and unemployment is important in the political and economic decision. So, in this article, we derive PHILLIPS CURVE regarded to the incomplete adjustment of nominal wages and prices. In other words, PHILLIPS CURVE based on the condition is New Keynesian PHILLIPS CURVE which is related to incomplete adjustment of nominal wages and prices.