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Keynes’s employment function and the gratuitous Phillips curve disaster

  • Kakarot-Handtke, Egmont

Keynes had a lot of plausible things to say about unemployment and its causes. His ‘mercurial mind’, though, relied on intuition which means that he could not prove his diverse opinions convincingly. This explains why Keynes’s ideas immediately invited bastardizations. One of them, the Phillips curve synthesis, proved to be fatal. This paper identifies Keynes’s undifferentiated employment function as weak spot. The structural employment function, on the other hand, works in inflationary and deflationary environments and supersedes the bastard Phillips curve. It will be rigorously demonstrated why there is no trade-off between price inflation and unemployment.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 43111.

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Date of creation: 06 Dec 2012
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Handle: RePEc:pra:mprapa:43111
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  1. Robert E. Hall, 2011. "The Long Slump," American Economic Review, American Economic Association, vol. 101(2), pages 431-69, April.
  2. Kakarot-Handtke, Egmont, 2011. "Keynes’s missing axioms," MPRA Paper 32742, University Library of Munich, Germany, revised 11 Aug 2011.
  3. Gordon, Robert J, 1990. "What Is New-Keynesian Economics?," Journal of Economic Literature, American Economic Association, vol. 28(3), pages 1115-71, September.
  4. Olivier Blanchard & Lawrence F. Katz, 1996. "What We Know and Do Not Know About the Natural Rate of Unemployment," NBER Working Papers 5822, National Bureau of Economic Research, Inc.
  5. Frank Ackerman, 2001. "Still dead after all these years: interpreting the failure of general equilibrium theory," Journal of Economic Methodology, Taylor & Francis Journals, vol. 9(2), pages 119-139.
  6. Marek Hudik, 2011. "Why economics is not a science of behaviour," Journal of Economic Methodology, Taylor & Francis Journals, vol. 18(2), pages 147-162.
  7. Frank Hahn & Robert Solow, 1997. "A Critical Essay on Modern Macroeconomic Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 026258154x, June.
  8. 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.
  9. Kakarot-Handtke, Egmont, 2012. "The rhetoric of failure: a hyper-dialog about method in economics and how to get things going," MPRA Paper 43276, University Library of Munich, Germany.
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