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Edmund Phelps and Modern Macroeconomics


  • Robert Dimand


Edmund Phelps, winner of the 2006 Nobel Prize in Economics, has been a central figure in the development of macroeconomics since his 1961 article 'The Golden Rule of Accumulation' on optimal economic growth. His 1967-68 critique of the stability of the Phillips curve trade-off, together with Friedman (1968), led to the expectations-augmented Phillips curve and the natural rate hypothesis. His work on the choice-theoretic microeconomic foundations of wage, price, and employment dynamics under imperfect information, changed how economists do macroeconomics. Phelps subsequently developed natural rate models in a non-monetary, structuralist direction distinct from Friedman's monetarism and from New Classical economics, analyzing the natural rate of unemployment as a function of the real structure of the economy: real sectoral demands, factor supplies, technology, taxes, subsidies, tariffs, and real interest and exchange rates.

Suggested Citation

  • Robert Dimand, 2008. "Edmund Phelps and Modern Macroeconomics," Review of Political Economy, Taylor & Francis Journals, vol. 20(1), pages 23-39.
  • Handle: RePEc:taf:revpoe:v:20:y:2008:i:1:p:23-39 DOI: 10.1080/09538250701661798

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    References listed on IDEAS

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    Cited by:

    1. Pies, Ingo, 2011. "Theoretische Grundlagen demokratischer Wirtschafts- und Gesellschaftspolitik: Der Beitrag von Edmund Phelps," Discussion Papers 2011-10, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.

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