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Targets, Tradeoffs, and Economic Policy: A Generalized Phillips Curve

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  • Shl Omo Maital

    (Department of Economics Tel-Aviv University)

Abstract

Frank Bechling recently wrote that “the concentration on the trade-off between unemployment and inflation and the neglect of trade-offs between unemployment and other variables (balance of payments, economic growth, structural change, and income distribution) may lead to a suboptimal choice between inflation and unemployment.†Starting from this proposition, this paper uses a simple yet believable model to construct simulated short-run transformation curves for major economic objectives. One of these curves is the familiar Phillips curve relation between inflation and unemployment. Proper design of policy demands knowledge of subjective preferences, as well as objective tradeoffs, among economic goals. A tentative empirical method for investigating preferences is set out, along with some initial findings.

Suggested Citation

  • Shl Omo Maital, 1973. "Targets, Tradeoffs, and Economic Policy: A Generalized Phillips Curve," Public Finance Review, , vol. 1(2), pages 67-83, April.
    • Handle: RePEc:sae:pubfin:v:1:y:1973:i:2:p:67-83
    DOI: 10.1177/109114217300100206
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    References listed on IDEAS

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    1. Maital, Shlomo, 1972. "Inflation, Taxation and Equity," Economic Journal, Royal Economic Society, vol. 82(325), pages 158-169, March.
    2. Nicholas Kaldor, 1955. "Alternative Theories of Distribution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 23(2), pages 83-100.
    3. Frank Brechling, 1968. "The Trade-Off between Inflation and Unemployment," Journal of Political Economy, University of Chicago Press, vol. 76, pages 712-712.
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    5. Paul A. Samuelson, 1956. "Social Indifference Curves," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 1-22.
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