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Friedman’S Nobel Lecture And The Phillips Curve Myth

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  • FORDER, JAMES

Abstract

In his Nobel lecture, Friedman built on his earlier argument for a “natural rate of unemployment” by painting a picture of an economics profession which, as a result of foolish mistakes, had accepted the Phillips curve as offering a lasting trade-off between inflation and unemployment, and was thereby led to advocate a policy of inflation. It is argued here that, in fact, the orthodox economists of the time often did not accept Phillips’ analysis; almost no one made the mistakes in question; and very few advocated inflation on bases vulnerable to Friedman’s theoretical criticisms. The Phillips curve was put to various uses, but advocating inflation was hardly amongst them. It is suggested that one lasting result of the uncritical acceptance of Friedman’s history is to limit what appears to be within the reasonable range of views about macroeconomic policy.

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  • Forder, James, 2010. "Friedman’S Nobel Lecture And The Phillips Curve Myth," Journal of the History of Economic Thought, Cambridge University Press, vol. 32(03), pages 329-348, September.
  • Handle: RePEc:cup:jhisec:v:32:y:2010:i:03:p:329-348_00
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    References listed on IDEAS

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    1. M. G. Hayes, 2006. "The Economics of Keynes," Books, Edward Elgar Publishing, number 12601, April.
    2. John F. Helliwell, 2006. "From Flapper to Bluestocking: What Happened to the Young Woman of Wellington Street?," Bank of Canada Review, Bank of Canada, vol. 2005(Winter), pages 31-39.
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    Cited by:

    1. Roger E. Backhouse, 2013. "Responding to economic crisis: macroeconomic revolutions in the 1930s and 1970s," Chapters,in: Before and Beyond the Global Economic Crisis, chapter 2, pages 38-54 Edward Elgar Publishing.
    2. Kakarot-Handtke, Egmont, 2011. "Increasing returns and stability," MPRA Paper 33133, University Library of Munich, Germany.
    3. Alexandre Flávio Silva Andrada, 2014. "Um Estudo Do Discurso Doutrinário De Robert E. Lucas Jr. Método E História Das Ideias Acerca Das Análises De Ciclos Econômicos," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting] 005, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    4. Kakarot-Handtke, Egmont, 2012. "Keynes’s employment function and the gratuitous Phillips curve disaster," MPRA Paper 43111, University Library of Munich, Germany.
    5. Hawkins, Raymond J., 2017. "Macroeconomic susceptibility, inflation, and aggregate supply," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 469(C), pages 15-22.
    6. Zinn, Jesse, 2013. "Stagflation and the Rejection of Keynesian Economics: A Case of Naive Falsification," MPRA Paper 50536, University Library of Munich, Germany.
    7. Roger E. Backhouse & James Forder, 2013. "Rationalizing Incomes Policy in Britain, 1948-1979," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2013(1), pages 17-35.
    8. Goulven Rubin, 2012. "Robert Solow de la courbe de Phillips à la question des fondements de la macroéconomie: 1960-1981," Working Papers hal-00852269, HAL.

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