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Friedman and Lucas on the Phillips Curve: From a Disequilibrium to an Equilibrium Approach

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  • Michel De Vroey

    (Universite Catholique de Louvain)

Abstract

In this paper I compare Friedman's expectations-augmented Phillips Curve model with Lucas' model on expectations and the neutrality of money and claim that they are underpinned by two different equilibrium concepts. Friedman's model is based on the stationary equilibrium conception, typical of the Marshallian research program. In contrast, Lucas' conception of equilibrium is an outgrowth of the Walrasian conception of equilibrium. In particular, I underline that Friedman's model is a disequilibrium model--witnessing to the fact that disequilibria are a standard outcome whenever the Marshallian conception of equilibrium is adopted--whereas, on the contrary, no room exists for disequilibrium in Lucas' model.

Suggested Citation

  • Michel De Vroey, 2001. "Friedman and Lucas on the Phillips Curve: From a Disequilibrium to an Equilibrium Approach," Eastern Economic Journal, Eastern Economic Association, vol. 27(2), pages 127-148, Spring.
    • Handle: RePEc:eej:eeconj:v:27:y:2001:i:2:p:127-148
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/eeconj/Volume27/V27N2P127_148.pdf
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    Citations

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    Cited by:

    1. Michel De Vroey, 2004. "The History of Macroeconomics Viewed against the Background of the Marshall-Walras Divide," History of Political Economy, Duke University Press, vol. 36(5), pages 57-91, Supplemen.
    2. Michel De Vroey, 2007. "Did The Market‐Clearing Postulate Pre‐Exist New Classical Economics? The Case Of Marshallian Theory," Manchester School, University of Manchester, vol. 75(3), pages 328-348, June.
    3. Sylvie Rivot, 2020. "Information and Expectations in Policy-Making: Friedman's Changing Approaches to Macroeconomic Dynamics," GREDEG Working Papers 2020-39, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    4. Oláh, Dániel, 2018. "Neoliberalism as a Political Programme and Elements of its Implementation – A Narrative in Theoretical History," Public Finance Quarterly, Corvinus University of Budapest, vol. 63(1), pages 96-112.
    5. José Francisco Bellod Redondo, 2013. "La NAIRU y la pseudociencia neoliberal," Revista de Economía Crítica, Asociación de Economía Crítica, vol. 16, pages 18-43.
    6. Michel De Vroey, 2004. "Lucas on involuntary unemployment," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 28(3), pages 397-411, May.
    7. Michel De Vroey, 2001. "L'histoire des théories économiques sous le prisme de l'hétérodoxie. Une analyse critique de l'Histoire de la pensée économique de Ghislain Deleplace," Cahiers d'Économie Politique, Programme National Persée, vol. 38(1), pages 115-133.
    8. Michel De Vroey, 2002. "The history of economic thought: the French way," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 9(4), pages 672-687.
    9. Danilo Freitas Ramalho Da Silva, 2014. "Lucas’S Early Research In The 1960’S," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41st Brazilian Economics Meeting] 009, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].

    More about this item

    Keywords

    Equilibrium; Money; Phillips Curve; Walrasian;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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