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macroeconomics_and_the_phillips_curve_myth

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macroeconomics_and_the_phillips_curve_myth [2018/07/25 22:05]
dan [The beginnings of the Phillips curve myth; textbooks and surveys; and routinization]
macroeconomics_and_the_phillips_curve_myth [2018/07/25 22:09] (current)
dan [Poor responses to Friedman]
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- Friedman challenged his peers to provide a sturdy theoretical model of cost-push inflation -- critical to much of the foregoing work -- and nobody did.   - Friedman challenged his peers to provide a sturdy theoretical model of cost-push inflation -- critical to much of the foregoing work -- and nobody did.
- The expectations argument was refuted again and again in subsequent econometric work, but the authors "all allow the econometrics to speak for itself in showing Friedman to be wrong, giving no explanation of what economic behaviour might underlie such a result."​((p191. ​ **Further: end p191**))   - The expectations argument was refuted again and again in subsequent econometric work, but the authors "all allow the econometrics to speak for itself in showing Friedman to be wrong, giving no explanation of what economic behaviour might underlie such a result."​((p191. ​ **Further: end p191**))
-  - In presenting his thesis, Friedman (1968) simply assumes that the economy is at the natural rate of unemployment,​ whereas the accepted Keynesian methods for using demand to reduce unemployment //without raising inflation// applied when this was not the case.  The "​amazing"​((p192,​ and noted later by Hahn (1982) and de Vroey (1998))) lack of response to Friedman on this point allowed the actual techniques of demand management to be overshadowed by a straw man.+  - In presenting his thesis, Friedman (1968) simply assumes that the economy is at the natural rate of unemployment,​ whereas the accepted Keynesian methods for using demand to reduce unemployment //without raising inflation// applied when this was not the case.  The "​amazing"​((p192,​ and noted later by Hahn (1982) and de Vroey (1998) )) lack of response to Friedman on this point allowed the actual techniques of demand management to be overshadowed by a straw man.

===== The circumstances in which the myth developed ===== ===== The circumstances in which the myth developed =====