Phillips curve

Our Dollar, Your Problem: An Insider’s View of Seven Turbulent Decades of Global Finance, and the Road Ahead

by Kenneth Rogoff  · 27 Feb 2025  · 330pp  · 127,791 words

Centennial,” American Economic Review Papers and Proceedings 103, no. 3 (May 2013): 48–54. 10. A prominent thesis attributed the problem to the “flat Phillips curve.” The Phillips curve is named after a British-based economist originally from New Zealand, A. W. Phillips, who in the late 1950s noticed a stable negative relationship between

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banks gained anti-inflation credibility, they were better able to engage in countercyclical policy, pushing up inflation when unemployment was high and thereby turning the Phillips curve on its head. Still, reasonable observers are left wondering whether economists ever really understood what was going on. 11. See Ben Bernanke, “Deflation: Making Sure

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at (2005), 82–87 peseta (Spain), 2, 120, 124, 299 n.6 peso (Argentina), 148 peso (Mexico), 131, 133 Phillips, A. W., 324 n.10 Phillips curve, 324 n.10 Plaza Accord, 30, 73, 157 Poland, 17, 46 Pollin, Robert, 129, 329 n.14 Polo, Marco, 183, 185 populism, 274 Porter, Michael

Money and Government: The Past and Future of Economics

by Robert Skidelsky  · 13 Nov 2018

curve 191 19. IS-LM model 203 20. Keynesian and neo-classical views of the economy 204 21. The Phillips Curve, 1948–1957 205 22. Expectations-augmented Phillips Curve 207 23. The Sargent-Lucas Phillips Curve 210 xiii F ig u r e s 24. Output growth in the advanced economies during the Great Moderation 215

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creating money illusion, stimulate business activity by increasing the rapidity, or velocity, of circulation.35 This insight made him the originator of the short-run Phillips Curve (see pp. 205–8), later taken up by Milton Friedman. Ever since 37 H i s t ory of E c onom ic T houg

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with price movements, the 144 t h e k e y n e si a n a s c e n da n c y ‘Phillips Curve’ implied that price stability was to be had for an increase in unemployment at some way beyond what had been recently experienced, but way short

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the analytical 146 t h e k e y n e si a n a s c e n da n c y relevance of ‘Phillips Curve’ Keynesianism, pointing out that Phillips’s data mostly preceded the existence of a full employment guarantee by the state: Victorian domestic servants, agricultural workers and

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and central banks, their political masters, and the academic economists advising them. Accustomed as they were to the world of Bretton Woods and the stable Phillips Curve, they believed that governments were tooled up to keep the business cycle within narrow limits, even in the face of serious ‘shocks’. In the 1970s

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to rising inflation; and that subsequent attempts to reduce inflation would carry far heavier employment and output costs than in the days of the reliable Phillips Curve. The misery or ‘discomfort’ index (the sum of unemployment and inflation) chronicled the deteriorating macroeconomic position (Figure 15).43 It now appeared that each economic

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employment commitment, they argued that the problem was social: the breakdown of the contract between employers and unions. Since it was indisputable that both the Phillips Curve and the incomes policy versions of Keynesianism had collapsed, there was both a narrative and a policy vacuum. In the 1970s, the ‘ungovernability’ thesis was

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. 22 In his Presidential Address to the American Economic Association, entitled ‘The Role of Monetary Policy’ (1968), Friedman mounted a frontal assault on the Keynesian Phillips Curve, the view that there existed a stable trade-off between inflation and unemployment.23 We have seen that, as an empirical hypothesis, the

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Phillips Curve started to collapse towards the end of the 1960s, as the ‘trade-off’ worsened, producing simultaneously rising inflation and unemployment. The key mistake of the

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becomes ‘built in’ to workers’ expectations. (See Appendix 7.2, p. 205, for a more thorough account of adaptive expectations and Friedman’s expectations-augmented Phillips Curve.) In all this, Friedman was simply echoing David Hume two centuries previously. Employment can be increased by monetary means only if increased inflation is unanticipated

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as a lingering sense of realism – in Friedman’s theory of adaptive expectations.47 Lucas accepted Friedman’s argument that policymakers’ attempt to exploit the Phillips Curve trade-off between inflation and unemployment caused the trade-off to disappear. This is because it led to changes in the behaviour of the relevant

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the contracts based on them. Lucas simply abolished the lag. Rational agents should be able to process all available information efficiently in forming expectations. The Phillips Curve is vertical in the short-run as well as in the long-run, as agents instantaneously adapt their expectations in accordance with ‘the model’. Lucas

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e Mode l l i ng of E x p e c tat ions The Keynesian Phillips Curve Friedman’s Adaptive Expectations The Philips Curve failed altogether to distinguish between nominal wages and real wages. In the Phillips Curve world, all agents anticipated that nominal prices would be stable, whatever happened to actual prices

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. Take the following simple version of adaptive expectations: ( ) Et [ Pt +1] = Et −1 ⎡⎣[ Pt ]⎤⎦ + λ Pt − Et −1[ Pt ] ;0 < λ < 1 Figure 21. The Phillips Curve, 1948–195762 11 51 Rate of change of money wage rates, % per year 10 Curve fitted to 1861–1913 data 9 8 56 7 55

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to observing increases in price. All of this is to say that one cannot profit from the inflation–output trade-off shown by the original Phillips Curve in the medium–long-run, as the Curve itself shifts due to the level of inflation rising and people adjusting their expectations upward. Friedman’s

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theory of adaptive expectations gives the ‘expectationsaugmented Phillips Curve’ (Figure 22). The economy starts at point A, at the natural rate of unemployment (see below) where demand is equal to the economy’s productive

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capacity. The government sees that it is on a given short-run Phillips Curve (SRPC1) and wants to take advantage of its inflation–unemployment trade-off, so it stimulates the economy to reduce unemployment to rate 206 t h

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t h e ory a n d p r ac t ic e of mon e ta r i sm Inflation Figure 22. Expectations-augmented Phillips Curve P2 P1 SRPC1 SRPC2 LRPC D E B C U1 A Natural rate of unemployment Unemployment U1. At this level of unemployment, workers demand higher

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adaptive expectations, agents expect inflation of P1, and this becomes built into their wage demands. The economy thus moves to point C. The short-run Phillips Curve has shifted outwards, to SRPC2, reflecting a worsening of the inflation– output trade-off.* If the government tries a similar tactic again, the * On Friedman

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’s account, short-run Phillips Curves are indexed by the inflation expectations of agents at the natural rate of unemployment. On SPRC1, for example, inflation is expected to be 0 at

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then E in the same fashion, but at a faster pace as workers have learned from their previous experience. This further pushes the short-run Phillips Curve to the right. In the long-run, expansionist monetary policy leads directly to higher inflation, with no effect on unemployment. The long-run

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Phillips Curve (LRPC) is completely vertical. There is no trade-off between inflation and employment at all. In practice, this means that intervention is undesirable as it

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, insofar as price instability erodes the productive capacity of the economy – for example, decreasing investment – the long-run Phillips Curve will shift rightwards as the natural rate of unemployment rises. Lucas’s Vertical Phillips Curve ‘Rational expectations’ first appeared in the economic theory literature in a famous article by J. Muth in 1961, but

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. Policy can influence real variables only by using information not known to the public, otherwise it would be fully anticipated and incorporated into expectations. The Phillips Curve is vertical in the long-run and in the short-run, which rules out any fiscal or monetary intervention designed to improve an existing equilibrium

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. That is, once you assume that agents are rational and equipped with the same information and preferences, you can treat Figure 23. The Sargent-Lucas Phillips Curve π 0% SR = LR un u 210 t h e t h e ory a n d p r ac t ic e of mon

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interest rate; if GDP growth is expected to be strong and interest rates to be low, then output will be high. 2. A New Keynesian Phillips Curve, linking current inflation to expected future inflation and the output gap. If inflation in the future is expected to be high, then (for example) workers

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. . . ’ Hendry and Ericsson (1991), p. 27. Friedman quoted in Wood (1995), p. 107. Friedman (1970), p. 24. Friedman (1968), p. 6. Ibid. The attack on Phillips Curve Keynesian was the joint work of Milton Friedman and Edward Phelps. Friedman (1968), p. 8. Ibid., pp. 12–13. Friedman (1951). A point forcefully made

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‘natural’ rate of unemployment, 163, 177, 181, 195, 206, 208 onslaught on Keynesianism, 170, 174, 177–83, 261 ‘permanent income hypothesis’ (1957), 178, 183 and Phillips Curve, 38, 180–81, 194, 206–8, 207 472 i n de x policy implications of work of, 182–3 political motives of, 177, 183–4

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on, 44–9 oil price shock (1973–4), 166–7, 189, 190 oil price spike (1980–82), 189, 190 onset of stagflation (1965–9), 164 Phillips Curve, 144–5, 147, 162, 163, 180, 194, 205, 205–12 post-war period until 1960s, 32, 148 and quantitative easing (QE), 254, 258, 261, 262

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, 213, 251, 255, 278, 311 in neo-classical multiplier, 134–6 in new fiscal constitution, 352 as not optimally self-adjusting, 172, 311, 339 and Phillips Curve, 206 as price of liquidity, not saving, 121, 297 and quantity theory, 61, 64, 65, 66–7, 68–70, 71 and Thornton, 47, 278 Victorian

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, 217 Peel, Robert, 47–8, 86 Péreire brothers, 91 Pettifor, Ann, 246, 309 Pettis, Michael, 339 Petty, William, 28 Phillips, A. V., 144–5, 147 Phillips Curve, 144–5, 147, 162, 163, 205, 205–6 collapse of in 1970s, 169, 180 Friedman’s expectations-augmented, 180–81, 206–8, 207 New-Keynesian

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, 212 Sargent-Lucas (rational expectations), 208–11, 210 short-run, 38, 194, 206–8 see also inflation: Phillips Curve; interest rates: and Phillips curve; unemployment: Phillips Curve Pigou, Arthur, 109, 290–91 Piketty, Thomas, Capital in the Twenty-First Century (2013), 289, 298–9, 301–3 Pitt, William (the younger

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–13, 321–2, 328, 388 and erroneous austerity arguments, 230–31, 232–3 and Friedman’s adaptive expectations, 208–9, 210 and heuristics, 196 Lucasian Phillips Curve, 208–11, 210 and monetarism, 186, 194 ‘public choice’ theory, 198–9 Volcker on, 307 Rawlsian political theory, 292 Reagan, Ronald, 6, 181, 186, 190

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, 130, 304, 350 ‘natural’ rate of, 2, 163, 177, 181, 192–3, 197, 206, 208, 222, 232–3, 384 oil price shock (1973–4), 166 Phillips Curve, 144–5, 147, 162, 163, 180, 194, 205, 205–12, 207 as primary government responsibility, 87–8, 98, 130–31, 139–40, 141–6, 147

The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival

by Charles Goodhart and Manoj Pradhan  · 8 Aug 2020  · 438pp  · 84,256 words

5 The Resurgence of Inflation 6 The Determination of (Real) Interest Rates During the Great Reversal 7 Inequality and the Rise of Populism 8 The Phillips Curve 9 ‘Why Didn’t It Happen in Japan?’ A Revisionist History of Japan’s Evolution 10 What Could Offset Global Ageing? India/Africa, Participation

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of them were in evidence in Japan. The second is that the recent relationship between unemployment and wage, or price, inflation, commonly known as the Phillips curve, Chapter 8, has not yet shown any tendency for wage rates to rise as unemployment falls, in a large number of advanced economies. Indeed, unemployment

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that would have probably generated wage inflation in the last century, but there is as yet little sign of any resultant upsurge in wages. The Phillips curve has recently seemed flat, i.e. as unemployment falls, nominal wage growth remains more or less constant at low levels. In many countries, it

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interacting and interlocking viewpoints:An intuitive balance based on the dependency ratio; An exercise based on labour market demand and supply, otherwise known as the Phillips curve; and A consideration of the relative balance of savings and investment in the (non-financial) private sector, and the effects of this on the

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of dependents over the foreseeable future, but it is the rate of growth that is changing throughout, and that matters here. 5.1.2 The Phillips Curve and the Impending Rise of the NRU Wage growth has shown a surprising tendency to remain low despite a sharp reduction in unemployment, which we

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labour, combined with a shift of jobs towards the unskilled, who are both less productive and paid less. These forces have combined to make the Phillips curve, relating wage (and price) growth to unemployment, seem more horizontal. But there is a limit to such trends. We have already suggested that it

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‘gig economy’? A plausible hypothesis. Let us put the question another way; why would such technological developments change the slope and/or position of the Phillips curve? With the same level of overall unemployment, why would the associated aggregate wage/price outcome be less? Here the suggestion is that workers in the

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low fixed investment (in the USA at least), it is less clear why and how it might have changed the slope and position of the Phillips curve. But ‘again’ the suggestion is that the more powerful is the employer relative to the employees, the tighter must the labour market become, the

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even worse. © The Author(s) 2020 C. Goodhart, M. PradhanThe Great Demographic Reversalhttps://doi.org/10.1007/978-3-030-42657-6_8 8. The Phillips Curve Charles Goodhart1 and Manoj Pradhan2 (1)London School of Economics, London, UK (2)Talking Heads Macro, London, UK Charles Goodhart (Corresponding author) Email: c.a

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.goodhart@lse.ac.uk Manoj Pradhan Email: manoj@talkingheadsmacro.com 8.1 Introduction: The Historical Development The Phillips curve traces out the relationship between unemployment and wages (or prices). When unemployment is low, the demand for labour is high relative to the available supply

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of aggregate demand. The overall, macroeconomic relationship between unemployment/employment and wage rate growth/inflation should obviously be curvilinear, rather than constant/kinked. So, the Phillips curve analysis arrived in a welcoming context. Quite quickly economists working in the Civil Service, especially Ministries of Finance, saw their function as to help their

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political masters to set demand, mainly via fiscal policy, to achieve that point on the Phillips curve that would minimise the political disutility of unemployment on the one hand and inflation on the other (Diagram 8.2). Diagram 8.2Achieving the political

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optimum on the Phillips curve That period, perhaps running from the Korean War until about 1973, was a transient golden age for macroeconomics. Mainframe computers (IBM) could now allow

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of the economy. Growth was good, employment high, and inflation not too high, and (we thought) it could be fixed, more or less, via the Phillips curve analysis. At that juncture, macroeconomists began to feel that they could use an engineering-type blueprint to steer our economies along an optimal path. It

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lower unemployment below the NRU, the result could only be to cause an ever-increasing rate of inflation. This concept, of a vertical long-run Phillips curve, was an important buttress for the subsequent move to Central Bank independence, with a mandate to concentrate on price stability via an inflation target. With

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such a Phillips curve, Central Bank measures to maintain price stability would not of themselves affect longer-run employment, growth or productivity, which were (in the long term) determined

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rising UE in 2009/2010), and then, after the recovery to much lower levels of UE, it failed to rise from the prior doldrums. The Phillips curve combinations of UE and price inflation are shown, over the years 2006–2018, separately for the USA, UK, Germany and Japan. Diagram 8.5The horizontal

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to the general longer-term outlook for our economies. In the next section, we review no less than six different sets of explanations:i.The Phillips curve is defunct; ii. Expectations are all that matter; iii.Successful monetary policies; iv.A changing structure of employment; v.Growing weight on global factors; vi

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and inflation at 1–2%; in other words extrapolating the recent past into the indefinite future. Such extrapolation is without any theoretical basis. Moreover, the Phillips curve cannot have disappeared, since it just reflects the balance of the demand and supply of labour. At the limit that balance could, in theory, revert

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to the (reverse) L curve of early Keynesian analysis, but in practice that is highly unlikely. The Phillips curve may change its slope and shape, for reasons that need to be assessed and appreciated, but it cannot just disappear. 8.2.2 Expectations Dominate

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? It was the (partial) failure to take the role of expectations into account that led the initial short-run Phillips curve to become unstable. By contrast it is now sometimes asserted that expectations are all that matters. Thus it is sometimes implied that, so long as

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decade would have had to have resulted in an acceleration in inflation, which has not happened. Lindé and Trabandt (2019) argue that a non-linear Phillips curve could explain both the ‘missing deflation’ in 2008–2010 and the slow recovery subsequently. ‘Put differently, even though economic growth may resume after a deep

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below. 8.2.3 Successful Monetary Policies McLeay and Tenreyro (2018) have reminded us, in their paper on ‘Optimal Inflation and the Identification of the Phillips Curve’, that the purpose of monetary policy is to stabilise inflation at its target level. If all shocks were to demand, so that inflation and output

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also affected by other structural factors, and wage, or price, inflation would be zero. This would be so even though the structural underlying relationship (the Phillips curve) between slack in the labour market and inflation may have remained strong, stable and constant. If the shocks affecting the economy were supply shocks, such

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policy would have to balance the loss from disequilibrium output against the loss from failing to hit the inflation target. In order to identify the Phillips curve in such conditions of simultaneity, one would need to be able to assess and quantify occasions of supply shocks and/or monetary policy errors.5

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of better monetary policies and fewer supply shocks, rather than representing any change to the underlying structural relationship. If this was so, then calculations of Phillips curve relationships for separate segments of a single monetary area, e.g. where monetary policy could not offset regional diversities, should show a greater (negative) slope

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work, e.g. not only McLeay and Tenreyro (ibid.), but also Hooper, Mishkin and Sufi, ‘Prospects for Inflation in a High Pressure Economy: Is the Phillips Curve Dead or is it just Hibernating?’ (May 2019). 8.2.4 A Changing Structure of Employment Karl Marx opined that wages would be held down

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opportunities regarding openings and pay. Indeed, as Mojon and Ragot, (2019), show, if you strip out the elderly from the calculated relationship, then the adjusted Phillips curve tends to fit much better. This finding has several implications. First, as long as there remains a sizeable buffer of elderly still prepared to switch

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elastically between work and retirement, then the Phillips curve will appear to be more horizontal, since employers can fill job vacancies from that source (as well as from migrants) rather than having to raise

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impact of global factors has also changed significantly over time – especially for CPI inflation and the cyclical component of inflation. For example, in both the Phillips curve and trend-cycle frameworks, changes in the world output gap and commodity prices have had a greater impact on CPI inflation and the cyclical component

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international conditions. By using both inflation components and filters that eliminate trends and focus on cyclical variation, a different picture of the stability of the Phillips curve emerges. Whereas the standard accelerationist relationship between changes in inflation and gaps has flattened, the relationship between the weighted cyclical components and cyclical activity is

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combine even lower unemployment with price stability, but that will not last. The message of this chapter is that, not only is the long-run Phillips curve vertical at the NRU (u*), but also the position of u* is continuously and systematically shifting owing to longer-run demographic, political and economic forces

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actual, ex post, inflation might help to identify the underlying structural relationship. 6While this does seem to hold for the wage/unemployment version of the Phillips curve, attempts to resurrect the price/output gap formulation of this relationship have been rather less successful. What has caused this divergence, e.g. time varying

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unemployment in Japan, though never high, fell to levels that, by Western standards, were remarkably low and yet that did not raise wages. So, the Phillips curve does seem to have been extremely flat in Japan for nearly two decades now. And that is what the standard analysis now expects for the

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to the first issue, Japan’s productivity profile, not just for its own sake but also en route to understanding the nature of Japan’s Phillips curve. I. Japan’s Productivity Surge and the Global Clues Embedded in its Outbound FDI The wedge between the 1% growth rate of Japan’s total

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within the constraints of Japan’s singular labour market norms. The result was a shrinking labour force that didn’t result in wage inflation. The Phillips Curve: Why didn’t a shrinking labour force lead to wage inflation in Japan? ‘Unlike in the United States and Europe, where unemployment tends to

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mostly to their company, rather than to a trade union, and the counterpart commitment from the employers is to maintain employment during downturns. So, the Phillips curve in this respect is very flat, with more of the adjustment to cyclical forces being felt in hours worked than in either unemployment or wages

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market is that if there is one part of Japan’s economy that does not participate in economic adjustment, it is employment, i.e. the Phillips curve has always been flat in Japan, more so than in other advanced countries. The origins of Japan’s labour customs: World War II changed Japan

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of employment and forced wages and hours to do most of the adjustment. 9.3.3 Participation As noted separately in the chapter on the Phillips curve, when the labour force ages, and the proportion of people over 55 rises, the key margin is that between employment and non-participation in

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9.10). Diagram 9.10Japan’s 65–75 participation rate is joint-highest in the OECD (Source OECD) Much greater slack and an uniquely Japanese Phillips Curve So, for all the above reasons, the degree of potential slack in Japan at the beginning of 2000 was vastly greater than suggested by the

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the particular features of the Japanese labour market, with insiders having a largely guaranteed job, while outsiders have little bargaining power, not only was the Phillips curve inherently much flatter than elsewhere, but also the natural rate of unemployment is probably considerably lower in Japan than elsewhere. 9.3.4 Why the

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they could control the pressure of demand via fiscal policies in order to obtain the optimal, social, trade-off between unemployment and inflation, along the Phillips curve. After the awful experiences of the 1930s, when the post-war policymakers had been young, they wanted to err (asymmetrically) in going for the

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start to rise significantly in future. Our view that this may well happen is countered by a variety of arguments. The first is that the Phillips curve has become much more horizontal. We address this in Chapter 8. The second is that it has not happened in Japan; we address this in

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Economic Review, 58(1), 1–17. Hooper, P., Mishkin, F. S., & Sufi, A. (2019, May). Prospects for Inflation in a High Pressure Economy: Is the Phillips Curve Dead or is It Just Hibernating? (National Bureau of Economic Research Working Paper, No. 25792). Lindé, J., & Trabandt, M. (2019, April 23). Resolving the Missing

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Deflation Puzzle (Centre for Economic Policy Research Discussion Paper DP13690). McLeay, M., & Tenreyro, S. (2018). Optimal Inflation and the Identification of the Phillips Curve (Discussion Papers 1815, Centre for Macroeconomics [CFM]). Mojon, B., & Ragot, X. (2019, March). Can an Ageing Workforce Explain Low Inflation? (Bank for International Settlements Working

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/gasoline, tax rate on Phelps, E.S. Philippines Philippon, T. Phillips, A.W. Phillips curve Phillips curve, flat in Japan Phillips curve, historical development of Phillips curve, horizontal? Phillips curve, in Japan Phillips curve, long-run Phillips curve, long-term, vertical at NRU Phillips curve, recently horizontal Phillips curve, short-run Phillips curve, short-term, downwards sloping Phillips curve analysis Physicians Piao, S. Pierce, J.R. Piketty, T. Piton, S. Plaza Accord

Not Working: Where Have All the Good Jobs Gone?

by David G. Blanchflower  · 12 Apr 2021  · 566pp  · 160,453 words

2012 to 4.1 percent at present. The muted responsiveness of inflation to labor market tightness, which we refer to as the flattening of the Phillips curve, also contributed to low inflation outcomes.1 Had the new strategy been adopted five years earlier, the Fed would have delayed rate increases that began

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during 2019, even as the unemployment rate fell to 3.5 percent at the start of 2020, weekly wage growth of average workers slowed. The Phillips curve, which you’ll learn about in the book, was flat as Kansas. The Fed’s error of raising rates too early made the American people

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and nominal sides of the economy is the subject of intense debate. In very general terms, there might be two forces at play. First, the Phillips curve might have changed. It might, for instance, have flattened, or it might have shifted downwards. Empirically, it is very hard to determine which—if either

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excessively tight…. What would be the consequences for inflation if unemployment were to run well below the natural rate for an extended period? The flat Phillips curve suggests that the implications for inflation might not be large, although a very tight labor market could lead to larger, nonlinear effects. That wage explosion

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seems to not care much about data at all but assumes wages are going to pick up anyway: “Many commentators have recently argued that the Phillips curve is no longer apparent in the data…. My view is that these fears are largely misplaced…. Successful monetary policy will make the

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Phillips curve harder to identify in the data…. I am unconvinced by reports of the death of the Phillips curve, so I expect this to translate into a pickup in domestic cost pressures.”13 I see no

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something bigger. This is pretty thin gruel to vote for rate rises on. Flat Bits Another way of looking at wage dynamics is through the Phillips curve, which Bill Phillips in his 1958 Economica article plotted as wage changes against the unemployment rate. The title of the article tells it all: “The

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it punchily: “There’s a big international discussion about why wages react so slowly to downward changes in the unemployment rate—this is the famous Phillips curve problem. We had just recently a meeting at the Bank for International Settlements where Bill Dudley, the central-bank governor of New York, said that

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in the U.S. the Phillips curve now is ‘flat as Kansas.’”15 That is a bit of an exaggeration, but the Phillips curve is clearly flatter than it was post-recession compared with pre-recession. Figure 11.1. (A) U

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.S. hourly wage Phillips curve of production and non-supervisory workers, January 1998-December 2007 (B) U.S. hourly wage Phillips curve of production and non-supervisory workers, January 2011-October 2018. Source: BLS. In a recent speech external MPC

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member Gertjan Vlieghe argued that a credible Phillips curve still exists in the UK. His main evidence was a plot of wage changes against the unemployment rate, such as in the period 2001 through

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Vlieghe’s time period from January 2001 to May 2018 using data on total pay growth using single-month data. There is a downward-sloping Phillips curve for the entire period with a best-fit line with the equation of y = -.7168x + 7.1158. At the current unemployment rate U3 in May

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that the unemployment rate doesn’t explain wages post-2008 whereas the underemployment rate does. The UK Phillips curve has flattened. So, it looks awfully like the Phillips curve is shallower in the United States and the UK and likely elsewhere too. In a paper with my Dartmouth colleague Andy Levin (Blanchflower and Levin

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to 2008, but as I have shown in earlier chapters, this was not fine subsequently. Figure 11.2. (A) UK AWE total pay single-month Phillips curve and the unemployment rate (U3), January 2001–May 2018. (B) UK AWE total pay single month and the underemployment rate (U7), September 2014–May 2018

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and 2.7% in 2019. 32. Silvana Tenreyro, “Models in Macroeconmics” (Speech given at the University of Surrey, June 4, 2018). 33. Jon Cunliffe, “The Phillips Curve: Lower, Flatter or in Hiding?” (Speech given at the Oxford Economics Society, Bank of England, November 14, 2017). 34. Based on Eurostat news releases, November

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When Whites of Inflation’s Eyes Are Visible,” Financial Times, February 8, 2015. 15. Quoted in Carolynn Look, “It’s Hard to Lift Wages When Phillips Curve Is as Flat as Kansas,” Bloomberg, November 3, 2017. 16. Gertjan Vlieghe, “From Asymmetry to Symmetry: Changing Risks to the Economic Outlook” (Speech given at

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., I. Marinescu, and M. I. Steinbaum. 2017. “Labor Market Concentration.” NBER Working Paper #24147. Babb, N. R., and A. K. Deitmeister. 2017. “Nonlinearities in the Phillips Curve for the United States: Evidence Using Metropolitan Data.” Finance and Economics Discussion Series, Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, Washington, DC

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Public Health Costs of Job Loss.” Journal of Health Economics 28 (6): 1099–1115. Kumar, A., and P. Orrenius. 2015. “A Closer Look at the Phillips Curve Using State Level Data.” Federal Reserve Bank of Dallas Working Paper No. 1409, May. Lach, S. 2007. “Immigration and Prices.” Journal of Political Economy 115

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, 338–39 Peri, Giovanni, 248–49 Personal Consumption Expenditures (PCE), 72 Peskowitz, Zachary, 326 Peters, William, 213 Phelps, Ned, 302–3 Phillips, William, 308, 309 Phillips curve, 208, 305, 307–11 Phone 4U, 335 Pickard, James, 272 Pidd, Helen, 273 Piketty, Thomas, 108, 109, 165, 337 Pinto, Sergio, 220 plastic surgery, 184

Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism

by George A. Akerlof and Robert J. Shiller  · 1 Jan 2009  · 471pp  · 97,152 words

unemployment and higher output. But that lower unemployment and higher output would occur at the expense of higher inflation. That trade-off is named the Phillips curve after the New Zealand–born economist A. W. Phillips of the London School of Economics. His 1958 article estimates econometrically the relation between wage inflation

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delivery by Milton Friedman of the presidential address to the American Economic Association in Washington, D.C., on December 29, 1967.6 According to the Phillips curves of the early 1960s, the nominal wage increases that people ask for depend only on the level of unemployment. But Friedman changed that notion. He

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of the significant oil supply shock that had occurred at the time and also an increase in inflationary expectations, both of which had shifted the Phillips curve outward. It explained the rise in unemployment as the result of a decline in demand. Furthermore new econometric estimates of

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Phillips curves that were augmented to include adjustment for inflationary expectations seemed to show that Friedman’s theory closely fit the data. They failed to reject Friedman’

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estimates were also very imprecise; thus they also failed to reject economically significant differences from natural rate theory.9 But the standard treatment of the Phillips curve ignores this inconvenient truth. The textbooks thus typically present natural rate theory as a “just-so” story. It goes like this. The previous macroeconomists had

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. Employment should be expanded until its costs, in terms of added inflation, just balanced the benefits. Since the trade-off between inflation and unemployment—the Phillips curve—showed inflation as escalating to high levels only at very low levels of unemployment, that meant that employment could be permanently high. These views were

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eventually challenged, especially by Milton Friedman, who argued that they were based on a view of the Phillips curve that was flawed by money illusion. In a proper Phillips curve, said Friedman, wages will shift with the expected rate of inflation. At a given level of unemployment, if both employers

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and employees expect inflation to be 3%, for example, rather than zero, wage increases will be exactly 3% higher. A Phillips curve that incorporates this reaction of inflation to expectations does not give a long-run trade-off between the level of inflation and the level of

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an increase in unemployment of 1.5 percentage points. How do we know? There is a rule of thumb that comes from the estimation of Phillips curves: it takes a 2-percentage-point increase in unemployment to reduce inflation by 1%. Therefore to neutralize the 0.75% cost increase to the firms

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fair. But when inflation becomes higher, they think their employer should do so.16 We should admit that it is hard to estimate the way Phillips curves depend on inflationary expectations. But economic policy must be made in an environment in which there are doubts. Our problem with natural rate theory is

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(1977, p. 265). If inflationary expectations are formed as a moving average of recent past inflation, estimates of Phillips curves should find that the coefficients on lagged inflation sum to one. Many estimates of Phillips curves fail to reject that this sum is equal to one. Given the importance of such findings, it is

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remarkable that their robustness to specifications of time period, data, and exact specification of the Phillips curve have never been subjected to tough tests—even though

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everything else about the Phillips curve, including the natural rate of unemployment itself, is considered to be estimated with great imprecision. Akerlof et al

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rate itself (Staiger et al. 1997); it would be surprising that the sum of lagged coefficients could be estimated precisely if another component of the Phillips curve, the natural rate, could be estimated only with very low precision. Gordon’s own estimates show very different values for this sum of coefficients. Of

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that they should sum to one. 9. There were high standard errors. 10. Before Friedman, Edmund Phelps (1968) had demonstrated the accelerationist view of the Phillips curve. In 2006 he was belatedly awarded the Nobel Prize in economics, mainly for this insight. 11. Tobin (1972b, p. 3). 12. Christofides and Peng (2004

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as a weighted average (more formally, as a distributed lag) of past inflation. In this case the sum of the weights on past inflation in Phillips curve estimations indicates the extent to which natural rate theory holds. If the sum of the coefficients is one, then as expected inflation increases, wages will

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weights are less than one, then wages will increase by less than inflationary expectations. For an exception to this argument see Sargent (1971). 15. When Phillips curves are estimated respectively for periods of low and high inflation for the United States, the sum of the weights on past inflation is close to

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on lagged inflation when inflation is high than when it is low. But we should also warn the reader that it is hard to estimate Phillips curves. There could be systematic reasons why these estimates are in error. But these reasons for error are hard—indeed perhaps impossible—to probe. For example

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. 1996. “The Macroeconomics of Low Inflation.” Brookings Papers on Economic Activity 1:1–59. ———. 2000. “Near-Rational Wage and Price Setting and the Long-Run Phillips Curve.” Brookings Papers on Economic Activity 1:1–44. Akerlof, Robert J. 2008. “A Theory of Social Interactions.” Unpublished paper, Department of Economics, Harvard University. “Aldrich

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of Economics 110(2):529–38. Mankiw, N. Gregory, and Ricardo Reis. 2002. “Sticky Information versus Sticky Prices: A Proposal to Replace the New Keynesian Phillips Curve.” Quarterly Journal of Economics 117(4):1295–328. Marsh, Terry A., and Robert C. Merton. 1986. “Dividend Variability and Variance Bound Tests for the Rationality

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Trough of Depression: Lord Meston on New Trade Orientation.” 1937. The Times (London), April 21, p. 18. Palley, Thomas I. 1994. “Escalators and Elevators: A Phillips Curve for Keynesians.” Scandinavian Journal of Economics 96:111–16. Peebles, Gavin. 2002. “Saving and Investment in Singapore: Implications for the Economy in the Early 20th

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–15, 174, 189–90n1–21; Canada’s failure to recognize, 114–15; diminished acceptance of, 43–46; fairness and, 107, 109–10, 111. See also Phillips curve infrastructure, government responsibility for, 172 Ingersoll, Jonathan, 182n22 inputs and outputs, 24, 25 In Search of Excess (Crystal), 32 insider-outsider theories, 189n17 Insull, Samuel

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of China, 126 Perón, Juan, 139–40 Perry, George L., 110, 183n8, 189n1, 190n8,10,15 Phelps, Edmund, 183n10 Phillips, A. W., 43, 45, 182n5 Phillips curve, 43–46, 107–8, 110, 183n10, 189–90n15, 190n16; flawed view of asserted, 108; inflationary expectations and, 113, 182–83n8; principles of, 43 Pierce, Brooks

Hubris: Why Economists Failed to Predict the Crisis and How to Avoid the Next One

by Meghnad Desai  · 15 Feb 2015  · 270pp  · 73,485 words

Index FIGURES 1Marshall’s Cross 2Keynes’s aggregate demand and aggregate supply curves 3Hicks’s version of Keynes 4The Phillips curve 5Friedman’s version of the Phillips curve 6The Goodwin cycle 7Lucas’s version of the Phillips curve 8New classical aggregate demand and aggregate supply PREFACE In July 2007, I was invited by the Ministry of

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the level of unemployment as governments were wedded to a Keynesian policy. Researchers in the UK and US took up the task of estimating the “Phillips curve” using contemporary data. Paul Samuelson and his MIT colleague Robert Solow, two of the foremost US economists, presented a paper entitled “Analytical Aspects of an

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-Inflation Policy” before the American Economic Association Conference in 1959.16 This was perceived as an official seal of approval to the Phillips curve as a policy tool. Figure 4 The Phillips curve Phillips had provided Keynesians with the answer to what caused prices to rise: inflation. Persistently high levels of employment led to

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sustained money wage rises, and hence, by implication, via unit labor costs, price rises. Inflation was a labor market phenomenon, not a monetary one. The Phillips curve gave policy-makers a new tool but it involved making an uncomfortable choice. If the curve showed that at 3 percent unemployment, wage inflation was

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as much through equations and econometrics as through prose. Milton Friedman took up the cudgel on behalf of monetarism. He challenged the claim that the Phillips curve was, either analytically or as a policy tool, a good idea. This counterattack from Friedman and Chicago concentrated on the fragility of the

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Phillips curve. It honed in on the inconsistency with neoclassical theory, which held that demand and supply depended on relative and not absolute prices, that is, real

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in the labor market. He offered instead a superior explanation based on the movements in money stock.17 Friedman began with a deconstruction of the Phillips curve, which had been made the principal weapon in the official Keynesian policy armory. He argued that if the curve reflected the wage bargaining process, then

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interested in their real wage not their money wage. Their demand for a money wage increase would be influenced by their expectations of inflation. The Phillips curve would shift rightward and upward as inflation persisted (see Figure 5). If the rate of inflation was 3 percent, workers might be happy with a

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. But, if it were 5 percent they would demand 8 percent at a given level of unemployment. To control inflation, one could not use the Phillips curve as a device since the curve itself shifted because of the level of inflation. There was also the question of whether the aggregate level of

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cause inflation, and a higher one would depress the economy. Figure 5 Friedman’s version of the Phillips curve: as expected inflation rises, the curve shifts upward from a to e Friedman challenged the Phillips curve in his presidential address to the American Economic Association in December 1967. It was published in March 1968

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and sounded the death knell of policy prescriptions based on the Phillips curve.18 By the end of the 1960s, the Keynesians had accepted that the consumption function should include the influence of “permanent income” rather than just

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challenge to be met. By the mid-1970s, Friedman had become the most influential economist. Having dealt with the consumption function, the multiplier and the Phillips curve, Friedman moved on to provide an alternative paradigm for macroeconomics. This was monetarism. Monetarism derived much of its argument from the Cambridge equation of money

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one way a tranquilizer to ease the problem of the struggle between labor and capital for share in final income. Indeed the debate about the Phillips curve can be understood in this way. Could the workers be fobbed off with just nominal wage rises which could then be clawed back by inflation

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economies to the risks of inflation, which they struggled to control. The 1970s introduced the world to the concept of stagflation, an idea that the Phillips curve version of Keynesianism could not accommodate. There was simultaneously inflation and unemployment. Keynesian economics had no theory or cure for inflation. The

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Phillips curve had been shown to be inconsistent with micro theory. In any case, the rate of inflation was too high for governments to use high unemployment

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there were any, had to be funded by borrowing rather than by printing money. Their theory said this could be done without causing unemployment. The Phillips curve was vertical and the economy, according to the monetarists, just slid down the curve. It did not prove to be so simple and both the

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UK and the US suffered from severe recessions during the early 1980s. But eventually inflation came down by increasing unemployment – a Phillips curve policy without acknowledging the influence. Western economies abandoned the commitment to full employment and gave priority to controlling inflation. Keynesian economics was dethroned from its

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or seller would always be wrong. Rational people ought to learn from their mistakes and not repeat them. This insight had immediate implications for the Phillips curve. Phillips had modeled the rate of change of money wages as related to unemployment. He did mention prices parenthetically in his article but did not

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–1913, there had been no discernible inflation or deflation over the 52-year period. Friedman used the logic of adaptive expectations to argue that the Phillips curve would move outward as inflationary expectations were revised upward. But even so the workers could always be behind the actual inflation rate if they used

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the labor market where the real wages would determine demand and supply. Robert Lucas, Friedman’s student and colleague at Chicago, asserted convincingly that the Phillips curve had to be vertical at a level of unemployment determined by the microeconomic theory of labor markets. On the issue of money wages and unemployment

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of the rate of rise in money wages, that is, the variable which was of interest in the Phillips curve. The equilibrium natural rate of unemployment was determined outside the space of the Phillips curve. The natural rate was given by the summing of many micro markets and independent of the aggregate money wage

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. Thus any rate of money wage could be associated with it depending on the rate of inflation. The “true” Phillips curve was thus vertical; with no trade-off between inflation and unemployment (see Figure 7).5 Lucas’s idea of a vertical

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Phillips curve implied that inflation was unconnected to the state of the labor market. Inflation was determined by money supply, as Friedman had argued. This was the

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but summing up random numbers can still make a pattern, as Slutsky had shown. But this was denied. Figure 7 Lucas’s version of the Phillips curve Hayek had argued a very different approach to the market way back in the 1930s. In a lecture to LSE students titled “Economics and Knowledge

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) partial equilibrium theory (i), (ii) Paterson, William (i) Pax Britannica (i) per capita incomes (i) perfect markets see under markets Phillips, A. W. H. (i) Phillips curve (i), (ii), (iii), (iv), (v), (vi), (vii) Friedman’s challenge (i) Friedman’s version (i) Phillips’ historical study (i) Pigou, Arthur Cecil (i), (ii), (iii

The Man Who Knew: The Life and Times of Alan Greenspan

by Sebastian Mallaby  · 10 Oct 2016  · 1,242pp  · 317,903 words

permanently low unemployment if they were willing to accept modest inflation; and two years later Paul Samuelson and his MIT colleague Robert Solow, applying the Phillips curve to U.S. data, suggested that an enlightened administration might choose unemployment of 3 percent at the price of inflation of just 4.5 percent

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. But to attain full employment, the United States had to do the opposite—it had to accept inflation in accordance with the implication of the Phillips curve, which indicated that rising prices could sustainably boost the number of jobs in the economy. As the goal of full employment trumped the fealty to

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confronted with the most extraordinary of facts. The Fed staff’s model appeared to assume that inflation would be a boon for American workers. The Phillips curve was creaking back to life, like a self-regenerating zombie. “If you believe that there are some costs to inflation, those are not embodied here

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to say nothing and certainly not to say anything interesting.” Blinder proceeded to the substance of his remarks, staking out territory that stood between the Phillips curve faith of the 1960s and the inflation-targeting creed of Don Brash and his disciples. “Where employment is concerned, in the short run macroeconomics is

…

The Business Cycle in a Changing World (New York: National Bureau of Economic Research, 1969), 128. 6. See Robert J. Gordon, “The History of the Phillips Curve: Consensus and Bifurcation,” July 15, 2009, https://ideas.repec.org/a/bla/econom/v78y2011i309p10-50.html.AU. 7. Quoted in William H. Chafe, The Unfinished

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, 1994. Bradsher’s story seems unfair in light of the fact that in congressional testimony four months later, Greenspan repeated Blinder’s view of the Phillips curve. “Over the long run I don’t see any trade off between inflation on the one hand and sustainable economic growth and . . . employment. . . . It is

…

first day of the FOMC meeting that ran from January 31 to February 1, 1995, Greenspan echoed Blinder, stating, “There still is a short-term Phillips Curve.” To be fair, part of the stormy reaction to Blinder’s comments came from European central bankers, whom Blinder had accused (correctly) of excessive tightness

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–77, 280–81 petroleum, 183 Phelan, John, 355–59 Philadelphia Federal Reserve, 377–78 Philadelphia Inquirer, 499 Phillips, A. W., 77, 451–52, 456–57 Phillips curve, 145, 452, 456 Phillips, Susan M., 482–83, 532–33 Phoenix, Arizona, 557–59 Pimco, 651 Pitt, Harvey, 599–600 Podesta, John, 563 political pressures

Debunking Economics - Revised, Expanded and Integrated Edition: The Naked Emperor Dethroned?

by Steve Keen  · 21 Sep 2011  · 823pp  · 220,581 words

of physical capital determines the amount of output. 2 Output determines employment. 3 The rate of employment determines the rate of change of wages (the ‘Phillips Curve’ relationship I discuss in the addendum to this chapter). 4 Wages times employment determines the wage bill, and when this is subtracted from output, profit

…

other topic that also belongs in this chapter, rather than the next on macroeconomics, where it would normally be discussed in a conventional textbook: the ‘Phillips Curve.’ This is an alleged relationship between the level of unemployment and the rate of inflation that, though it is hotly disputed within economics, nonetheless plays

…

to abandon their static methods and embrace dynamic analysis. This is precisely what I am attempting to do now, so Phillips’s work – including the ‘Phillips Curve’ – deserves to be discussed here as a valiant but unsuccessful previous attempt to shake economists out of their static straitjackets. Addendum: Misunderstanding Bill Phillips, wages

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and ‘the Phillips Curve’ Bill Phillips the man was undoubtedly one of the most dynamic human beings of all time. Compared to that of Phillips, the lives of most

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been falsely denigrated by neoclassical economists for ignoring the role of expectations in economics, this aspect of his model deserves attention prior to considering the Phillips Curve itself: Demand is also likely to be influenced by the rate at which prices are changing […] this influence on demand being greater, the greater the

…

, while economics has if anything gone backwards. Figure 9.11 illustrates both these modern simulation tools, and this difference between a linear and a nonlinear ‘Phillips Curve’ in Goodwin’s growth cycle model. One of these programs (Vissim) turns the six-step verbal description of Marx’s cycle model directly into a

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numerical simulation, using a linear ‘Phillips Curve.’ This model cycles as Marx expected, but it has extreme, high-frequency cycles in both employment and wages share. Embedded in the diagram is an

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otherwise identical model, which has a nonlinear Phillips Curve with the shape like that envisaged by Phillips. This has smaller, more realistic cycles and these have a lower frequency as well, closer to the

…

to 2 percent; if you wanted stable money wages instead, set unemployment to 5 percent; and pick off any other combination you like along the Phillips Curve as well. This simplistic, static ‘trade-off’ interpretation of Phillips’s empirically derived curve rapidly came to be seen as the embodiment of Keynesian economics

…

of the work of A. W. H. “Bill” Phillips. It is hardly an exaggeration to say that any student destitute of the geometry of the Phillips curve would have difficulty passing an undergraduate macroeconomics examination’ (Leeson 1997: 155). However, even his empirical research has been distorted, since it has focused on just

…

as a foundation, which concluded that macroeconomic policy could alter the level of economic activity. He began by conceding that most economists believed that the ‘Phillips Curve’ accurately described the ‘trade-off’ society faced between inflation and unemployment. He also conceded that the statistical evidence certainly showed a negative relationship between inflation

…

, in U.S. time series, inflation rates and unemployment are negatively correlated’ (ibid.: 50). 10.5 Unemployment-inflation data in the USA, 1960–70 The ‘Phillips Curve trade-off’ interpretation of these statistics turned an empirical regularity into a guide for policy. Since the statistics implied that unemployment and inflation moved in

…

. 10.6 Unemployment–inflation data in the USA, 1950–72 How then to justify skepticism about what seemed an obvious reality? He argued that the ‘Phillips Curve’ was simply an artifact of how ‘agents form and respond to price and wage expectations,’ and that attempting to exploit this curve for policy reasons

…

would destroy the apparent trade-off, because agents would change their expectations: ‘The main source of this skepticism is the notion that the observed Phillips curve results from the way agents form and respond to price and wage expectations, and that attempts to move along the curve to increase output may

…

, ultimately the economy would return to its equilibrium level of employment, but at a higher rate of inflation. This was characterized as the ‘short-run Phillips Curve’ ‘moving outwards’ – the temporary trade-off between higher inflation and lower unemployment in the transition involved higher and higher levels of inflation for the same

…

level of unemployment – while the ‘long-run Phillips curve’ was vertical at the long-run equilibrium level of unemployment. Though Friedman’s model was highly simplistic, his vigorous promotion of his ‘monetarist’ theories just

…

expectations accomplishes precisely this. In this system, there is no sense in which the authority has the option to conduct countercyclical policy. To exploit the Phillips Curve, it must somehow trick the public. But by virtue of the assumption that expectations are rational, there is no feedback rule that the authority can

…

employ and expect to be able systematically to fool the public. This means that the authority cannot expect to exploit the Phillips Curve even for one period. Thus, combining the natural rate hypothesis with the assumption that expectations are rational transforms the former from a curiosity with perhaps

…

with a debtor bailout We also need an explanation of how wages are set, and this raises the vexed issue of ‘the Phillips Curve.’ As explained earlier, a properly specified Phillips Curve should have three factors in determining money wages – the employment rate, its rate of change, and a feedback from inflation – but for

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, Armonk, NY: M. E. Sharpe. Lee, F. (1998) Post Keynesian Price Theory, Cambridge: Cambridge University Press. Leeson, R. (1991) ‘The validity of the expectations-augmented Phillips curve model,’ Economic Papers, 10: 92–6. Leeson, R. (1994) ‘A. W. H. Phillips M.B.E. (Military Division),’ Economic Journal, 104(424): 605–18. Leeson

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’ model Ormerod, Paul PAECON movement pain, avoidance of Patinkin, Don Pecora, Ferdinand perfect competition; durability of; equals monopoly; war over personal satisfaction Phillips, A. W. Phillips curve; short-run physiocrats piano playing Pick, A. Pigou, A. C. planetary behavior, theory of pleasure, pursuit of Poincaré, Henri policy ineffectiveness proposition politicians, influenced by

Restarting the Future: How to Fix the Intangible Economy

by Jonathan Haskel and Stian Westlake  · 4 Apr 2022  · 338pp  · 85,566 words

the demand side of the economy. But the effect on inflation also depends on the supply side. The supply side is generally represented by the Phillips curve, which shows that inflation comes from two sources. First, if you pump up the economy too far above capacity, inflation starts rising (known as the

…

low—most notably in Japan, where inflation has been very low for two decades. One way of interpreting this persistently low inflation is that the Phillips curve has become “flatter.” Indeed, this claim was central to the change in monetary policy framework announced by the US Federal Reserve in August 2020.34

…

A flatter Phillips curve means that for any particular rise in demand above capacity (or falling demand below capacity), the responsiveness of inflation has decreased greatly. The good news

…

expectations can remain very low. This reasoning might explain the persistently low inflation in Japan. Economists have a variety of stories as to why the Phillips curve has become flatter. The essential question is the extent to which firms adjust their prices as they come up against rising costs, perhaps due to

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“capacity” is somehow restricted doesn’t seem to apply. Maybe, then, the movement towards a more intangible economy can help explain the flattening of the Phillips curve.35 The Interest Rate and the “Neutral” Interest Rate Whilst central banks can change interest rates, they are ultimately limited by the natural forces that

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. 34. A recent review of the US position is Del Negro et al. (2020) and, for the UK position, Cunliffe (2017). Some dispute that the Phillips curve has become flatter (McLeay and Tenreyro 2020), but this issue has been widely discussed. 35. Subir Lall and Li Zeng (2020) find that rising investment

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in intangibles across countries is associated with a flattening aggregate supply curve, arguing that this trend is consistent with a flattening Phillips curve. 36. This section is based on Haskel (2020a). 37. Daly 2016; Rachel and Smith 2015. 38. See Kevin Daly “A Higher Global Risk Premium and

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, Tyler, and Ben Southwood. 2019. “Is the Rate of Scientific Progress Slowing Down?” https://docs.google.com/document/d/1cEBsj18Y4NnVx5Qdu43cKEHMaVBODTTyfHBa8GIRSec/edit. Cunliffe, Jon. 2017. “The Phillips Curve: Lower, Flatter, or in Hiding?” Bank of England, November 14. https://www.bankofengland.co.uk/-/media/boe/files/speech/2017/the

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-phillips-curve-lower-flatter-or-in-hiding-speech-by-jon-cunliffe. Daly, Kevin. 2016. “A Higher Global Risk Premium and the Fall in Equilibrium Real Interest Rates.”

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Room: The Amazing Rise and Scandalous Fall of Enron. New York: Portfolio. McLeay, Michael, and Silvana Tenreyro. 2020. “Optimal Inflation and the Identification of the Phillips Curve.” NBER Macroeconomics Annual 34:4–255. https://doi.org/10.1086/707181. McRae, Hamish. 1995. The World in 2020: Power, Culture and Prosperity. Cambridge, MA

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pandemic Papanikolaou, Dimitris, 58 patent wars, 2–3, 109, 269n43 Peltzman, Sam, 219 personalised pricing, 223–24 Phelps, Edmund, 136 Philippon, Thomas, 30, 41, 242 Phillips curve, 166–67 Piketty, Thomas, 27, 75, 242 Pinter, Gabor, 174 Piton, Sophie, 218 platforms, 114 Plath, Robert, 123 policy: competition, 15; financial and monetary, 14

Reaganland: America's Right Turn 1976-1980

by Rick Perlstein  · 17 Aug 2020

Keynesianism was exhausted ever since Milton Friedman, in his 1967 American Economic Association presidential address, took on the “Phillips Curve,” the thesis positing an inverse relationship between inflation and unemployment. Faith in the Phillips Curve had meant that if unemployment threatened to rise to unacceptable levels, the Federal Reserve could simply act to speed

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, 71, 83, 96, 232, 234, 235, 350, 364, 387, 388, 471, 484, 489–490, 491, 495, 595, 801, 870 Phillips, Kevin, 27, 32, 33, 94 Phillips Curve, 279 Phillips Petroleum, 335 Phyllis Schlafly Report, 77 Pickle, Jake, 450 “Pink Sheet” (flyer), 78–79 Pioneer Fund, 386 Pipes, Richard, 44 Pittsburgh Press, 581

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