Hostname: page-component-8448b6f56d-jr42d Total loading time: 0 Render date: 2024-04-24T20:58:12.944Z Has data issue: false hasContentIssue false
  • English
  • Français

Early Doubts about the Phillips Curve Trade-Off

Published online by Cambridge University Press:  11 June 2009

Robert Leeson
Get access Rights & Permissions [Opens in a new window]

Extract

The language of graphical analysis has an immediacy which has proven potent in the dissemination of economic ideas (Solow, 1987, p. 186). J. M. Keynes' General Theory of Employment, Interest and Money contained only one diagram (Keynes, 1936, p. 180), but J. R. Hicks' graphical IS/LM analysis contributed to the popularization of one interpretation of Keynes' message. Paul Samuelson's textbook used many graphs, which may account, in part, for its pedagogical irresistibility (Elzinga, 1992, p. 863). Two graphs, named after A. W. H. Phillips and Arthur Laffer respectively, became particularly influential in post-1960 policy debates. The “theoretical Phillips curve” (Phillips, 1953, p. 31; 1954, p. 308) was of interest mainly to specialists in optimal control theory; and Phillips' second empirical curve (Phillips, 1959) remained unpublished for almost four decades. Yet his first empirical curve (1958) led to policy implications which were accepted by virtually an entire scientific profession almost instantaneously, “with alacrity” (Friedman, 1977, p. 469). It appeared to fill a gap in the Keynesian neoclassical synthesis, and was rapidly adopted by the textbook writers (Samuelson, 1961, p. 383; Lipsey, 1963, p. 438). During the 1960s, it became widely accepted that ongoing inflation would be accompanied by a sustained reduction in unemployment. When inflation came to be associated with increasing rates of unemployment, this reflected adversely on the economics profession in general, and Keynesian economics in particular.

Type
Articles
Information
Journal of the History of Economic Thought , Volume 20 , Issue 1 , March 1998 , pp. 83 - 102
Copyright
Copyright © Cambridge University Press 1998

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Ackley, G. 1958. “A Third Approach to the Analysis and Control of Inflation,” in Lehman, 1958.Google Scholar
Ackley, G. 1961. Macroeconomic Theory, Macmillan, New York.Google Scholar
Arrow, K. J. 1958. “The Measurement of Price Changes,” in Lehman, 1958.Google Scholar
Arrow, K. J. 1959. “Towards a Theory of Price Adjustment,” in Abramowitz, M., et al., eds., The Allocation of Economic Resources, Stanford University Press, Stanford.Google Scholar
AshenfelterO., G. Johnson O., G. Johnson and Pencavel, J.. 1972. “Trade Unions and the Rate of Change of Money Wages in the United States Manufacturing Industry,” Review of Economic Studies, 39, 1, January, 27–54.CrossRefGoogle Scholar
Bach, G. L. 1958. “How Important is Price Stability in Stable Economic Growth?,” in Lehman, 1958.Google Scholar
Balogh, T. 1958. “Productivity and Inflation,” Oxford Economic Papers, June, 220–245.CrossRefGoogle Scholar
Barber, W. J. 1975. “The Kennedy Years: Purposeful Pedagogy,” in Goodwin, C. D., ed., Exhortion and Control: The Search for a Wage Price Policy 1945–71, Brookings Institution, Washington.Google Scholar
Baumol, W. J. 1958. “Price Behaviour, Price Stability and Growth,” in Lehman, 1958.Google Scholar
Baumol, W. J. 1961. “Pitfalls in Contracyclical Policies: Some Tools and Results,” Review of Economics and Statistics, 43, 21–26.CrossRefGoogle Scholar
Baumol, W. J. 1998. “Phillips and Stabilisation Policy as a Threat to Stability,” in Leeson, ed., 1998, ch. 27.Google Scholar
Bhatia, R. J. 1961. “Unemployment and the Rate of Change of Money Earnings in the United States 1900–1958,” Economica, 28, August, 286–296.CrossRefGoogle Scholar
Blackaby, F. 1978. “General Appraisal,” in Blackaby, F., ed., British Economic Policy 1960–74, Cambridge University Press, Cambridge.Google Scholar
Bodkin, R. G. 1966. The Wage Price Productivity Nexus, Philadelphia, University of Pennsylvania.CrossRefGoogle Scholar
Bodkin, R. G., Bond, E. P., Reuber, G. L. and Robinson, T. R.. 1966. Price Stability and High Employment: The Options for Canadian Economic Policy: An Econometric Study, Economic Council of Canada, Ottawa.Google Scholar
Bowen, W. G. 1960. Wage Behaviour in the Post-War Period: An Empirical Analysis, Princeton University Press, Princeton.Google Scholar
Brechling, F. 1959. “Anglo-German Export Competition,” Three Banks Review, 41, March, 3–20.Google Scholar
Brown, A. J. 1955. The Great Inflation, Oxford University Press, London.Google Scholar
Cairncross, A. 1969. “Economic Forecasting,” Economic Journal, 79, no. 316, 797–812.Google Scholar
Chandler, L. 1960. “The Prolem of Stable Prices—Discussion,” American Economic Review, 50, Papers and Proceedings of 72nd Annual Meeting, 212–215.Google Scholar
Clark, C. 1960. “The Present Position of Econometrics: Further Discussion,” The Journal of the Royal Statistical Society, Part 3, 287–292.Google Scholar
Conrad, A. H. 1959. The Share of Wages and Salaries in Manufacture Incomes 1947–56, Study Paper No. 9, Harvard Economic Research Project.Google Scholar
Corry, B. and Laidler, D.. 1967. “The Phillips Relation—A Theoretical Explanation,” Economica, May, 189–197.Google Scholar
Corry, B. and Laidler, D.. 1968. “Some Empirical Tests of the Phillips Relationship,” unpublished mimeo.Google Scholar
Court, R. 1998. “The Lucas Critique: Did Phillips Make a Comparible Contribution?” in Leeson, 1998, ch. 47.Google Scholar
Desai, M. 1975. “The Phillips Curve: A Revisionist Interpretation,” Economica, 42, 165, February, 2–19.CrossRefGoogle Scholar
Desai, M. 1984. “Wages Prices and Unemployment a Quarter Century after the Phillips Curve,” in Hendry, D. K., and Wallis, K. F., eds., Econometrics and Quantitative Economics, Basil Blackwell, Oxford.Google Scholar
Downie, J. 1960. “Statistics and the Economist,” Journal of the Royal Statistical Society, Part 3, 278–282.Google Scholar
Dicks-Mireaux, L. A. and Dow, J. C. R.. 1959. “The Determinants of Wage Inflation: United Kingdom,” 1946–1956, Journal of the Royal Statistical Society, 123, Part II, 145–174.CrossRefGoogle Scholar
Dunlop, J. T., ed. 1957. The Theory of Wage Determination, Macmillan, London.Google Scholar
Eagly, R. V. 1965. “Market Power as an Intervening Mechanism in Phillips Curve Analysis,” Economica, 32, February, 48–64.CrossRefGoogle Scholar
Eckstein, O. 1958. “Inflation, the Wage-Price Spiral and Economic Growth,” in Lehman, 1958.Google Scholar
Eckstein, O. and Wilson, J. A.. 1962. “The Determination of Money Wages in American Industry,” Quarterly Journal of Economics, 70, 379–414.CrossRefGoogle Scholar
Elzinga, K. G. 1992. “The Eleven Principles of Economics,” Southern Economic Journal, 860–879.Google Scholar
Epstein, R. 1987. A History of Econometrics, North Holland, Amsterdam.Google Scholar
Friedman, M. 1953. Essays in Positive Economics, University of Chicago Press, Chicago.Google Scholar
Friedman, M. 1958. “The Supply of Money and Changes in Prices and Output,” in Lehman, 1958.Google Scholar
Friedman, M. 1962. Price Theory: A Provisional Text, Aldine, Chicago.Google Scholar
Friedman, M. 1968a. “The Role of Monetary Policy,” American Economic Review, 58, May, 1–17.Google Scholar
Friedman, M. 1968b. Dollars and Deficits, Prentice Hall, New Jersey.Google Scholar
Friedman, M. 1974. “Schools at Chicago,” University of Chicago Magazine, 11–16.Google Scholar
Friedman, M. 1976. Price Theory, Aldine, Chicago.Google Scholar
Friedman, M. 1977. “Inflation and Unemployment: Nobel Lecture,” Journal of Political Economy, 85, 3, 451–472.CrossRefGoogle Scholar
Gilpatrick, E. G. 1966. Structural Unemployment and Aggregate Demand: A Study of Employment and Unemployment in the United States 1948–1964, Johns Hopkins Press, Baltimore.Google Scholar
Godley, W. A. H. 1976. “Costs, Prices and Demand in the Short-Run,” in Surrey, M. J. C., ed., Macroeconomic Themes: Edited Readings in Macroeconomics With Commentaries, Oxford University Press, Oxford.Google Scholar
Griffin, K. B. 1962. “A Note on Wages, Price and Unemployment,” The Bulletin of the Oxford University Institute of Statistics, 379–385.CrossRefGoogle Scholar
Haberler, G. 1961. Inflation: Its Causes and Its Cure, American Enterprise Association, Washington.Google Scholar
Hansen, A. H. 1960. Economic Issues of the 1960s, McGraw Hill, New York.Google Scholar
Harcourt, G. 1998. “A Left Keynesian Response to the Phillips Curve,” in Leeson, 1998, ch. 30.Google Scholar
Hayek, F. 1960. The Constitution of Liberty, Henry Regnery and Co., Chicago.Google Scholar
Hines, A. G. 1964. “Trade Unions and Wage Inflation in the U.K. 1893–1961,” Review of Economic Studies, 31, October, 221–252.Google Scholar
Hines, A. G. 1969. “Wage Inflation in the United Kingdom 1948–62,” Economic Journal, 79, no. 313, March, 69–89.Google Scholar
Jacoby, N. 1958. “Maintaining Prosperity Without Inflation: Objectives, Problems and Policies,” in Lehman, 1958.Google Scholar
Johnson, H. G. 1957. “Discussion,” in Dunlop, 1957.Google Scholar
Johnson, H. G. 1975. On Economics and Society, University of Chicago Press, Chicago.Google Scholar
Kalechek, E. and Westerbbe, R.. 1961. “Rates of Unemployment in Great Britain and the United States 1950–60,” Review of Economics and Statistics, 43, no. 4, November, 340–350.Google Scholar
Kaldor, N. 1959. “Economic Growth and the Problem of Inflation Part II,” Economica, 26, November, 287–298.Google Scholar
Keynes, J. M. 1936. The General Theory of Employment Interest and Money, Macmillan, London.Google Scholar
Keynes, J. M. 1971–1989. Collected Writings of John Maynard Keynes, Macmillan, London.Google Scholar
Klein, L. R. and Ball, R. J.. 1959. “Some Econometrics of the Determination of Absolute Prices and Wages,” Economic Journal, 9, September, 465–482.CrossRefGoogle Scholar
Klein, L. R. and Bodkin, R. G.. 1964. Empirical Aspects of the Trade-Off Among Three Goals: High Level Employment, Price Stability and Economic Growth, Commission on Money and Credit Research Study Seven, Prentice-Hall, Englewood Cliffs.Google Scholar
Klein, L. R. and Goldberger, A. S.. 1955. An Econometric Model of the United States 1929–195, North Holland, Amsterdam.Google Scholar
Knowles, K. and Winsten, C.. 1959. “Can the Level of Unemployment Explain Changes in Wages?” The Bulletin of the Oxford University Institute of Statistics, 21, 113–120.Google Scholar
Laidler, D. 1994. David, Laidler, in Snowden, B., Vane, H. and Wynarczyk, P., eds., A Modern Guide to Macroeconomics, Edward Elgar, England.Google Scholar
Lebergott, S. 1964. “The Use of Unemployment Statistics for Monetary and Fiscal Policy,” in Inflation, Growth and Employment, Prentice-Hall, Englewood Cliffs.Google Scholar
Leeson, R. 1997. “The Trade Off Interpretation of Phillips', Dynamic Stabilisation Exercise,” Economica, 64, 155–171.Google Scholar
Leeson, R., ed., 1998. A. W. H. Phillips: Collected Works in Contemporary Perspective, Cambridge University Press, Cambridge.Google Scholar
Levinson, H. M. 1960. Postwar Movements of Prices and Wages in Manufacturing Industries, Study Paper No. 21, Study of Employment, Growth and Price Levels, Joint Economic Committee, January 30.Google Scholar
Levy, M. E. 1967. “Full Employment Without Inflation,” The Conference Board Record, 4, November, 36–41.Google Scholar
Lewis, J. P. 1958. “Pricing for Stability and Growth,” in Lehman, 1958.Google Scholar
Lehman, J., ed., 1958. The Relationship of Prices to Economic Stability and Growth, Compendium of Paper submitted to the Joint Economic Committee.Google Scholar
Lipsey, R. G. 1960. “The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom 1862–1957: A Further Analysis,” Economica, 27, February, 456–487.Google Scholar
Lipsey, R. G. 1963. An Introduction to Positive Economic Science; 2nd ed., 1966, Weidenfeld and Nicolson, London.Google Scholar
Lipsey, R. G. 1978. “The Place of the Phillips Curve in Macroeconomic Models,” in Bergstrom, A. R., et al., eds., Stability and Inflation: A Volume of Essays to Honour the Memory of A. W. H. Phillips, John Wiley and Sons, New York.Google Scholar
Lipsey, R. G. 1998. “Introduction to the Famous Phillips Curve Article,” in Leeson, 1998, ch. 23.Google Scholar
Lipsey, R. G. and Steuer, M. D.. 1961. “The Relation Between Profits and Wage Rates,” Economica, 28, May, 137–155.CrossRefGoogle Scholar
Marget, A. W. 1960. “Inflation: Some Lessons of Recent Foreign Experience,” American Economic Review, 50, Papers and Proceedings, of 72nd Annual Meeting, 205–211.Google Scholar
McCord Wright, D. 1961. The Keynesian System, Fordham University Press, New York.Google Scholar
Meade, J. 1958. The Control of Inflation, Cambridge University Press, Cambridge.Google Scholar
Means, G. 1959. Administrative Inflation and Public Policy, Anderson Kramer, Washington.Google Scholar
Morgan, E. V. 1966. “Is Inflation Inevitable?” Economic Journal, 76, no. 301, 1–15.CrossRefGoogle Scholar
Musgrave, R. 1958. “The Optimal Mix of Stabilisation Policies,” in Lehman, 1958.Google Scholar
Nourse, E. G. 1960. “Some Questions Emerging Under the Employment Act,” American Economic Review, 50, Paper and Proceedings, of 72nd Annual Meeting, 130–144.Google Scholar
Ozanne, R. 1959. “Impact of Unions on Wage Levels and Income Distribution,” Quarterly Journal of Economics, 23, no. 2, May, 177–196.CrossRefGoogle Scholar
Parkinson, J. R. 1958. “Wage Stability and Employment,” Scottish Journal of Political Economy, 85–98.Google Scholar
Pechman, J. A. 1960. “The Problem of Stable Prices—Discussion,” American Economic Review, 50, Papers and Proceedings, of 72nd Annual Meeting, 218–222.Google Scholar
Phelps Brown, E. H. 1957. “Discussion,” in Dunlop, 1957.Google Scholar
Phelps Brown, E. H. 1958. “The Conditions for the Avoidance of the Spiral,” Scottish Journal of Political Economy, 145–148.CrossRefGoogle Scholar
Phelps Brown, E. H. and Browne, M. H.. 1962. “Earnings in Industries in the United Kingdom, 1948–59,” Economic Journal, 72, no. 287, 517–549.Google Scholar
Phelps, E. S. 1961. “A Test for the Presence of Cost Inflation in the United States 1955–7,” Yale Economic Essays, Spring, 28–69.Google Scholar
Phelps, E. S. 1968. “Money Wage Dynamics and Labor Market Equilibrium,” Journal of Political Economy, 76, July-August, 678–711.Google Scholar
Phelps, E. S. 1985. Political Economy: An Introductory Text, W. W. Norton, New York.Google Scholar
Phillips, A. W. H. 1953. Dynamic Models in Economics, Ph.D. Thesis, University of London.Google Scholar
Phillips, A. W. H. 1954. “Stabilisation Policy in a Closed Economy,” Economic Journal, June, 290–323.Google Scholar
Phillips, A. W. H. 1958. “The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957,” Economica, 25, November, 283–299.Google Scholar
Phillips, A. W. H. 1959. “Wage Changes and Unemployment in Australia 1947–58,” Economics Monograph No. 219, Economic Society of Australia and New Zealand, New South Wales Branch; reprinted in Leeson, 1998, ch. 26.Google Scholar
Phillips, A. W. H. 1962. “Employment, Inflation and Growth,” Economics, 29, February, 1–16.Google Scholar
Radcliffe, Lord, et al., 1960. Committee on the Working of the Monetary System: Minutes of Evidence, HMSO, London.Google Scholar
Reddaway, W. B. 1959. “Wage Flexibility and the Distribution of Wages,” Lloyds Bank Review, 54, 32–48; reprinted in McCormick, B. J. and Smith, E. O., eds., The Labour Market, Penguin, England, 1968.Google Scholar
Rees, A. and Hamilton, M.. 1967. “The Wage-Price-Productivity Perplex,” Journal of Political Economy, 75, February, 63–70.Google Scholar
Reynolds, L. 1960. “The Problem of Stable Prices—Discussion,” American Economic Review, 50, Papers and Proceedings, of 72nd Annual Meeting, 195–204.Google Scholar
Ross, P. 1962. “Labour Market Behaviour and the Relation Between Unemployment and Wages,” Industrial Relations Research Association Proceedings, 275–288.Google Scholar
Routh, G. 1959. “The Relation Between Unemployment and the Rate of Change of Money Wage Rates,” Economica, 26, November, 299–315.Google Scholar
Rowley, J. C. R. and Wilton, D. A.. 1973a. “Quarterly Models of Wage Determination: Some New Efficient Estimates,” American Economic Review, 68, no. 3, 380–389.Google Scholar
Rowley, J. C. R. and Wilton, D. A.. 1973b. “The Empirical Sensitivity of the Phillips Curve,” The American Economist, 90–112.Google Scholar
Samuelson, P. 1961. Economics, 5th ed., McGraw Hill, New York.Google Scholar
Samuelson, P. and Solow, R.. 1960. “Analytical Aspects of Anti Inflation Policy,” American Economic Review, May, 177–194.Google Scholar
Santomero, A. and Seater, J.. 1978. “The Inflation Unemployment Trade Off: A Critique of the Literature,” Journal of Economic Literature, 16, June, 499–544.Google Scholar
Sargan, D. 1964. “Wages and Prices in the United Kingdom: A Study in Econometric Methodology,” in Hendry, D. K. and Wallis, K. F., eds., 1984, Econometrics and Quantitative Economics, Basil Blackwell, Oxford.Google Scholar
Saulnier, R. J. 1963. The Strategy of Economic Policy, New York, Fordham University Press.Google Scholar
Schultze, C. 1959. Prices, Costs and Output for the Post-War Decade 1947–57, Committee for Economic Development.Google Scholar
Schultze, C. 1960. Recent Inflation in the United States, Study Paper No. 1, Joint Economic Committee, United States Government Printing Office, Washington.Google Scholar
Schultze, C. and Tyron, J.. 1965. “Wages and Prices,” in James, Duesenberryet al., eds., Brookings Quarterly Econometric Model of the United States Economy, chapter 7, North Holland, Amsterdam.Google Scholar
Scitovsky, J. and Scitovsky, A.. 1964. Inflation versus Unemployment: An Examination of Their Effects, Commission on Money and Credit Research Study No. 8, Prentice-Hall, Englewood Cliffs.Google Scholar
Seldon, R. 1959. “Cost Push versus Demand Pull Inflation, 1955–57,” Journal of Political Economy, 67, no. 1, 1–20.CrossRefGoogle Scholar
Shackle, G. L. S. 1961. “Review of Books by Cartter, Guilleband, Bowen and S. Weintraub,” Economic Journal, 71, no. 233, September, 607–613.Google Scholar
Skidelsky, R., ed. 1977. The End of The Keynesian Era, London, Macmillan.Google Scholar
Slichter, S. 1959. “Is U.S. Inflation Inevitable?,” The Financial Times, June 8.Google Scholar
Slichter, S. 1961. Potentials of the American Economy, edited by John, Dunlop, Oxford University Press, Oxford.Google Scholar
Solow, R. 1987. “Francis Amasa Walker,” History of Political Economy, 19, no. 2, 183–189.Google Scholar
Stein, H. 1958. “A General View of the Inflation Problem,” in Lehman, 1958, 665–668.Google Scholar
Turner, H. A. 1958. “The Inadequacy of Recent Wage Theorising,” Scottish Journal of Political Economy, 168–174.Google Scholar
Turner, H. A. 1959. “Employment Fluctuations, Labour Supply and Bargaining Power,” Manchester School of Economic and Social Studies, May, 175–202.Google Scholar
Turner, H. A. 1960. “Wages, Productivity and the Level of Employment: More on the ‘Wages Drift,’” Manchester School of Economics and Social Studies, January, 89–123.Google Scholar
Walters, A. A. 1977. “Comments,” in Intrilligator, M., ed., vol. B, Frontiers of Quantitative Economics, North Holland, Amsterdam.Google Scholar
Weintraub, S. 1961. Classical Keynesian Monetary Theory and the Price Level, Chilton, Philadelphia.Google Scholar
Winsten, C. B. 1960. “The Present Position of Econometrics,” Journal of the Royal Statistical Society, part 3, 295–296.Google Scholar