Premium
The Trade‐off Interpretation of Phillips’s Dynamic Stabilization Exercise
Author(s) -
Leeson Robert
Publication year - 1997
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/1468-0335.00069
Subject(s) - phillips curve , economics , inflation (cosmology) , unemployment , keynesian economics , interpretation (philosophy) , rational expectations , macroeconomics , philosophy , linguistics , physics , theoretical physics
This paper, which examines Phillips’s famous curve, is based on Phillips’s private papers, and the London School of Economics Methodology, Measurement and Testing Seminar records (sources previously thought to be lost). These sources, plus Phillips’s theoretical work, suggest that the equilibrium ‘menu of choice’ is a misinterpretation of Phillips’s dynamic stabilization exercise. Phillips had a clearly articulated role for inflationary expectations in his model, and had no toleration for the notion that ongoing inflation could purchase sustainable reductions in the rate of unemployment. Evidence is cited which indicates that Milton Friedman was profoundly influenced by Phillips’s analysis of inflationary expectations.