Skip to main content
×
Home
    • Aa
    • Aa

THE PHILLIPS CURVE AND AN ASSUMED UNIQUE MACROECONOMIC EQUILIBRIUM IN HISTORICAL CONTEXT

  • Richard G. Lipsey (a1)
Abstract

An early post-WWII debate concerned the most desirable demand and inflationary pressures at which to run the economy. Context was provided by Keynesian theory devoid of a full employment equilibrium and containing its mainly forgotten, but still relevant, microeconomic underpinnings. A major input came with the estimates provided by the original Phillips curve. The debate seemed to be rendered obsolete by the curve’s expectations-augmented version with its natural rate of unemployment, and associated unique equilibrium GDP, as the only values consistent with stable inflation. The current behavior of economies with the successful inflation targeting is inconsistent with this natural-rate view, but is consistent with evolutionary theory in which economies have a wide range of GDP-compatible stable inflation. Now the early post-WWII debates are seen not to be as misguided as they appeared to be when economists came to accept the assumptions implicit in the expectations-augmented Phillips curve.

Copyright
References
Hide All
Carlo Altomonte , Alessandro Barattieri , and Susanto Basu . 2015. “Average-Cost Pricing: Some Evidence and Implications.” European Economic Review 79: 281296.

Mark Blaug . 1992. The Methodology of Economics. Second edition. Cambridge: Cambridge University Press.

Alan S Blinder . 1979. Economic Policy and the Great Stagflation. New York: Academic Press.

Kenneth I. Carlaw , and Richard G. Lipsey . 2012. “Does History Matter?: Empirical Analysis of Evolutionary versus Stationary Views of the Economy.” Journal of Evolutionary Economics 22 (4): 735766.

Richard G Lipsey . 1981. “The Understanding and Control of Inflation and Unemployment: Is There a Crisis in Macro-Economics?” Canadian Journal of Economics 14: 545576.

Robert E. Lucas Jr., and Leonard A. Rapping . 1969. “Real Wages, Employment, and Inflation.” Journal of Political Economy 77 (5): 721754.

Frank W Paish . 1958. “Inflation in the United Kingdom, 1948–1957.” Economica 25 (98): 94105.

Edmund S Phelps . 1967. “Phillips Curves, Expectations of Inflation and Optimal Unemployment over Time.” Economica NS 34: 254281.

Johannes A Schwarzer . 2012. “A. W. Phillips and His Curve: Stabilisation Policies, Inflation Expectations and the ‘Menu of Choice.’” The European Journal of the History of Economic Thought 19 (6): 9761003.

Johannes A Schwarzer . 2014. “Growth as an objective of economic policy in the early 1960s: the role of aggregate demand.” Cahiers d’économie politique/ Papers in Political Economy 67 (2): 175206.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Journal of the History of Economic Thought
  • ISSN: 1053-8372
  • EISSN: 1469-9656
  • URL: /core/journals/journal-of-the-history-of-economic-thought
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 7
Total number of PDF views: 98 *
Loading metrics...

Abstract views

Total abstract views: 955 *
Loading metrics...

* Views captured on Cambridge Core between 18th November 2016 - 18th October 2017. This data will be updated every 24 hours.