Phillips curve

For the Phillips curve in supernova astrophysics, see

Phillips relationship.
In economics, the Phillips curve is a historical inverse
relationship between rates of unemployment and corresponding rates of ination that result in an economy.
Stated simply, decreased unemployment, (i.e., increased
levels of employment) in an economy will correlate with
higher rates of ination.
While there is a short run tradeo between unemployment and ination, it has not been observed in the
long run.[1] In 1968, Milton Friedman asserted that the
Phillips Curve was only applicable in the short-run and
that in the long-run, inationary policies will not decrease
unemployment.[2] Friedman then correctly predicted that,
in the upcoming years after 1968, both ination and
unemployment would increase.[2] The long-run Phillips
Curve is now seen as a vertical line at the natural rate of
unemployment, where the rate of ination has no eect
on unemployment.[3] Accordingly, the Phillips curve is
now seen as too simplistic, with the unemployment rate
supplanted by more accurate predictors of ination based
on velocity of money supply measures such as the MZM
(money zero maturity) velocity,[4] which is aected by
unemployment in the short but not the long term.[5]
Rate of Change of Wages against Unemployment, United Kingdom 19131948 from Phillips (1958)

History

relationship between ination and unemployment. One

implication of this for government policy was that governments could control unemployment and ination with
a Keynesian policy. They could tolerate a reasonably high
rate of ination as this would lead to lower unemployment
there would be a trade-o between ination and unemployment. For example, monetary policy and/or scal
policy (i.e., decit spending) could be used to stimulate
the economy, raising gross domestic product and lowering the unemployment rate. Moving along the Phillips
curve, this would lead to a higher ination rate, the cost
of enjoying lower unemployment rates. Economist James
Forder argues that this view is historically false and that
In the 1920s an American economist Irving Fisher neither economists nor governments took that view and
noted this kind of Phillips curve relationship. However, that the 'Phillips curve myth' was an invention of the
Phillips original curve described the behavior of money 1970s.[7]
wages.[6]
Since 1974 seven Nobel Prizes have been given for work
William Phillips, a New Zealand born economist, wrote a
paper in 1958 titled The Relation between Unemployment
and the Rate of Change of Money Wage Rates in the United
Kingdom, 1861-1957, which was published in the quarterly journal Economica. In the paper Phillips describes
how he observed an inverse relationship between money
wage changes and unemployment in the British economy
over the period examined. Similar patterns were found in
other countries and in 1960 Paul Samuelson and Robert
Solow took Phillips work and made explicit the link between ination and unemployment: when ination was
high, unemployment was low, and vice versa.

In the years following Phillips 1958 paper, many critical of the Phillips curve. Some of this criticism
economists in the advanced industrial countries believed is based on the United States experience during the
that his results showed that there was a permanently stable 1970s, which had periods of high unemployment and
1

HISTORY

high ination at the same time. The authors receiving

those prizes include Thomas Sargent, Christopher Sims,
Edmund Phelps, Edward Prescott, Robert A. Mundell,
Robert E. Lucas, Milton Friedman, and F.A. Hayek.[8]

1.1

Stagation

In the 1970s, many countries experienced high levels of both ination and unemployment also known as
stagation. Theories based on the Phillips curve suggested that this could not happen, and the curve came
under a concerted attack from a group of economists
headed by Milton Friedman. Friedman argued that the
Phillips curve relationship was only a short-run phenomenon. In this he followed 8 years after Samuelson
and Solow [1960] who wrote " All of our discussion has
been phrased in short-run terms, dealing with what might
happen in the next few years. It would be wrong, though,
to think that our Figure 2 menu that related obtainable
price and unemployment behavior will maintain its same
shape in the longer run. What we do in a policy way during the next few years might cause it to shift in a denite
way. "[9] As Samuelson and Solow had argued 8 years
earlier, he argued that in the long run, workers and employers will take ination into account, resulting in employment contracts that increase pay at rates near anticipated ination. Unemployment would then begin to rise
back to its previous level, but now with higher ination
rates. This result implies that over the longer-run there is
no trade-o between ination and unemployment. This
implication is signicant for practical reasons because it
implies that central banks should not set employment targets above the natural rate.[1]

U.S. Ination and Unemployment 1/2000 to 4/2013

and a more formal analysis posits up to ve groups/curves

over the period.[1]
But still today, modied forms of the Phillips Curve that
take inationary expectations into account remain inuential. The theory goes under several names, with some
variation in its details, but all modern versions distinguish between short-run and long-run eects on unemployment. The short-run Phillips curve is also called the
expectations-augmented Phillips curve, since it shifts
up when inationary expectations rise, Edmund Phelps
and Milton Friedman argued. In the long run, this implies that monetary policy cannot aect unemployment,
which adjusts back to its "natural rate", also called the
NAIRU or long-run Phillips curve. However, this
long-run "neutrality" of monetary policy does allow for
short run uctuations and the ability of the monetary
authority to temporarily decrease unemployment by increasing permanent ination, and vice versa. Blanchard
(2000, chapter 8) gives a textbook presentation of the
expectations-augmented Phillips curve.

More recent research has shown that there is a moderate

trade-o between low-levels of ination and unemployment. Work by George Akerlof, William Dickens, and
George Perry,[10] implies that if ination is reduced from
two to zero percent, unemployment will be permanently
increased by 1.5 percent. This is because workers generally have a higher tolerance for real wage cuts than nominal ones. For example, a worker will more likely accept a
wage increase of two percent when ination is three percent, than a wage cut of one percent when the ination
rate is zero.
An equation like the expectations-augmented Phillips
curve also appears in many recent New Keynesian
dynamic stochastic general equilibrium models. In these
1.2 The Phillips curve today
macroeconomic models with sticky prices, there is a positive relation between the rate of ination and the level
Most economists no longer use the Phillips curve in its of demand, and therefore a negative relation between the
original form because it was shown to be too simplistic.[5] rate of ination and the rate of unemployment. This reThis can be seen in a cursory analysis of US ination lationship is often called the New Keynesian Phillips
and unemployment data from 1953-92. There is no sin- curve. Like the expectations-augmented Phillips curve,
gle curve that will t the data, but there are three rough the New Keynesian Phillips curve implies that increased
aggregations195571, 197484, and 198592each ination can lower unemployment temporarily, but canof which shows a general, downwards slope, but at three not lower it permanently. Two inuential papers that invery dierent levels with the shifts occurring abruptly. corporate a New Keynesian Phillips curve are Clarida,
The data for 1953-54 and 1972-73 do not group easily, Gal, and Gertler (1999) and Blanchard and Gal (2007).

2.1

The traditional Phillips curve

Mathematics and the Phillips

curve

The introduction of inationary expectations into the

equation implies that actual ination can feed back into
inationary expectations and thus cause further ination.
The late economist James Tobin dubbed the last term inThere are at least two dierent mathematical derivations ationary inertia, because in the current period, ination
of the Phillips curve. First, there is the traditional or exists which represents an inationary impulse left over
Keynesian version. Then, there is the new Classical ver- from the past.
sion associated with Robert E. Lucas, Jr.
It also involved much more than expectations, including the price-wage spiral. In this spiral, employers try
to protect prots by raising their prices and employees
2.1 The traditional Phillips curve
try to keep up with ination to protect their real wages.
The original Phillips curve literature was not based on This process can feed on itself, becoming a self-fullling
the unaided application of economic theory. Instead, prophecy.
it was based on empirical generalizations. After that, The parameter (which is presumed constant during any
economists tried to develop theories that t the data.
time period) represents the degree to which employees
can gain money wage increases to keep up with expected
ination, preventing a fall in expected real wages. It is
2.1.1 Money wage determination
usually assumed that this parameter equals unity in the
The traditional Phillips curve story starts with a wage long run.
Phillips Curve, of the sort described by A.W. Phillips In addition, the function f() was modied to introduce
himself. This describes the rate of growth of money the idea of the Non-Accelerating Ination Rate of Unemwages (gW). Here and below, the operator g is the equiv- ployment (NAIRU) or whats sometimes called the natalent of the percentage rate of growth of the variable ural rate of unemployment or the ination-threshold unthat follows.
employment rate:

gW = gW f (U )
T

The money wage rate (W) is shorthand for total money

wage costs per production employee, including benets
and payroll taxes. The focus is on only production workers money wages, because (as discussed below) these
costs are crucial to pricing decisions by the rms.

[1] gW = gWT - f(U U*) + gPex .

Here, U* is the NAIRU. As discussed below, if U < U*,
ination tends to accelerate. Similarly, if U > U*, ination tends to slow. It is assumed that f(0) = 0, so that
when U = U*, the f term drops out of the equation.
In equation [1], the roles of gWT and gPex seem to be redundant, playing much the same role. However, assuming that is equal to unity, it can be seen that they are
not. If the trend rate of growth of money wages equals
zero, then the case where U equals U* implies that gW
equals expected ination. That is, expected real wages
are constant.

This equation tells us that the growth of money wages

rises with the trend rate of growth of money wages (indicated by the superscript T) and falls with the unemployment rate (U). The function f() is assumed to be monotonically increasing with U so that the dampening of moneywage increases by unemployment is shown by the negative sign in the equation above.
In any reasonable economy, however, having constant exThere are several possible stories behind this equation. A pected real wages could only be consistent with actual real
major one is that money wages are set by bilateral negoti- wages that are constant over the long haul. This does not
ations under partial bilateral monopoly: as the unemploy- t with economic experience in the U.S. or any other mament rate rises, all else constant worker bargaining power jor industrial country. Even though real wages have not
falls, so that workers are less able to increase their wages risen much in recent years, there have been important increases over the decades.
in the face of employer resistance.
During the 1970s, this story had to be modied, because
(as the late Abba Lerner had suggested in the 1940s)
workers try to keep up with ination. Since the 1970s,
the equation has been changed to introduce the role of
inationary expectations (or the expected ination rate,
gPex ). This produces the expectations-augmented wage
Phillips curve:

gW = gW T f (U ) + .gP ex .

An alternative is to assume that the trend rate of growth of

money wages equals the trend rate of growth of average
labor productivity (Z). That is:
[2] gWT = gZT .
Under assumption [2], when U equals U* and equals
unity, expected real wages would increase with labor productivity. This would be consistent with an economy in
which actual real wages increase with labor productivity.

MATHEMATICS AND THE PHILLIPS CURVE

Deviations of real-wage trends from those of labor pro- 2.1.3 The price of Phillips curves
ductivity might be explained by reference to other variThen, combined with the wage Phillips curve [equation 1]
ables in the model.
and the assumption made above about the trend behavior
of money wages [equation 2], this price-ination equation
2.1.2 Pricing decisions
gives us a simple expectations-augmented price Phillips
curve:
Next, there is price behavior. The standard assumption
is that markets are imperfectly competitive, where most
gP = f(U U*) + gPex .
businesses have some power to set prices. So the model
assumes that the average business sets prices as a mark- Some assume that we can simply add in gUMC, the rate
up (M) over unit labor costs in production measured at of growth of UMC, in order to represent the role of
a standard rate of capacity utilization (say, at 90 percent supply shocks (of the sort that plagued the U.S. during
use of plant and equipment) and then add in unit material the 1970s). This produces a standard short-term Phillips
costs.
curve:
The standardization involves later ignoring deviations
gP = f(U U*) + gPex + gUMC.
from the trend in labor productivity. For example, assume that the growth of labor productivity is the same as
that in the trend and that current productivity equals its Economist Robert J. Gordon has called this the Triangle
Model because it explains short-run inationary behavtrend value:
ior by three factors: demand ination (due to low unemployment), supply-shock ination (gUMC), and inationT
T
gZ = gZ and Z = Z .
ary expectations or inertial ination.
The markup reects both the rms degree of market
power and the extent to which overhead costs have to be
paid. Put another way, all else equal, M rises with the
rms power to set prices or with a rise of overhead costs
relative to total costs.
So pricing follows this equation:
P = M (unit labor costs) + (unit materials
cost)
= M (total production employment cost)/(quantity of output) +
UMC.

In the long run, it is assumed, inationary expectations

catch up with and equal actual ination so that gP = gPex .
This represents the long-term equilibrium of expectations adjustment. Part of this adjustment may involve the
adaptation of expectations to the experience with actual
ination. Another might involve guesses made by people
in the economy based on other evidence. (The latter idea
gave us the notion of so-called rational expectations.)
Expectational equilibrium gives us the long-term Phillips
curve. First, with less than unity:
gP = [1/(1 )](f(U U*) + gUMC).

This is nothing but a steeper version of the short-run

UMC is unit raw materials cost (total raw materials costs Phillips curve above. Ination rises as unemployment
divided by total output). So the equation can be restated falls, while this connection is stronger. That is, a low unemployment rate (less than U*) will be associated with
as:
a higher ination rate in the long run than in the short
run. This occurs because the actual higher-ination sitP = M (production employment cost per
uation seen in the short run feeds back to raise inationworker)/(output per production employee)
ary expectations, which in turn raises the ination rate
+ UMC.
further. Similarly, at high unemployment rates (greater
than U*) lead to low ination rates. These in turn enThis equation can again be stated as:
courage lower inationary expectations, so that ination
itself drops again.
P = M(average money wage)/(production
labor productivity) + UMC
This logic goes further if is equal to unity, i.e., if workers are able to protect their wages completely from ex= M(W/Z) + UMC.
pected ination, even in the short run. Now, the Triangle
Model equation becomes:
Now, assume that both the average price/cost mark-up
(M) and UMC are constant. On the other hand, labor
- f(U U*) = gUMC.
productivity grows, as before. Thus, an equation determining the price ination rate (gP) is:
If we further assume (as seems reasonable) that there are
no long-term supply shocks, this can be simplied to begP = gW - gZT .
come:

2.3

New Keynesian version

f(U U*) = 0 which implies that U = U*.

Y Yn
All of the assumptions imply that in the long run, there P = Pe +
a
is only one possible unemployment rate, U* at any one
time. This uniqueness explains why some call this unem- Next we add unexpected exogenous shocks to the world
supply v:
ployment rate natural.
To truly understand and criticize the uniqueness of U*, a
more sophisticated and realistic model is needed. For exY Yn
ample, we might introduce the idea that workers in dier- P = Pe +
+v
a
ent sectors push for money wage increases that are similar
to those in other sectors. Or we might make the model Subtracting last years price levels P1 will give us inaeven more realistic. One important place to look is at the tion rates, because
determination of the mark-up, M.

2.2

New classical version

P P1

and
The Phillips curve equation can be derived from the
(short-run) Lucas aggregate supply function. The Lucas
approach is very dierent from that the traditional view.
Instead of starting with empirical data, he started with Pe P1 e
a classical economic model following very simple ecowhere and are the ination and expected ination
nomic principles.
respectively.
Start with the aggregate supply function:
There is also a negative relationship between output and
unemployment (as expressed by Okuns law). Therefore
using
Y = Yn + a(P Pe )
where Y is log value of the actual output, Yn is log value Y Yn
= b(U Un )
of the natural level of output, a is a positive constant, P
a
is log value of the actual price level, and Pe is log value
of the expected price level. Lucas assumes that Yn has a where b is a positive constant, U is unemployment, and
unique value.
Un is the natural rate of unemployment or NAIRU, we
Note that this equation indicates that when expectations arrive at the nal form of the short-run Phillips curve:
of future ination (or, more correctly, the future price
level) are totally accurate, the last term drops out, so
that actual output equals the so-called natural level of
real GDP. This means that in the Lucas aggregate supply curve, the only reason why actual real GDP should
deviate from potentialand the actual unemployment
rate should deviate from the natural rateis because
of incorrect expectations of what is going to happen with
prices in the future. (The idea has been expressed rst by
Keynes, General Theory, Chapter 20 section III paragraph 4).
This diers from other views of the Phillips curve, in
which the failure to attain the natural level of output can
be due to the imperfection or incompleteness of markets,
the stickiness of prices, and the like. In the non-Lucas
view, incorrect expectations can contribute to aggregate
demand failure, but they are not the only cause. To
the new Classical followers of Lucas, markets are presumed to be perfect and always attain equilibrium (given
inationary expectations).
We re-arrange the equation into:

= e b(U Un ) + v
This equation, plotting ination rate against unemployment U gives the downward-sloping curve in the diagram
that characterises the Phillips curve.

2.3 New Keynesian version

The New Keynesian Phillips curve was originally derived
by Roberts in 1995,[11] and since been used in most stateof-the-art New Keynesian DSGE models like the one of
Clarida, Gal, and Gertler (2000).[12][13]

t = Et [t+1 ] + yt
. The current expectations of
where = [1(1)]
1
next periods ination are incorporated as Et [t+1 ]

Ination
Rate
NAIRU or
Long-Run
Phillips Curve

New Short-Run
Phillips Curve
Initial Short-Run
Phillips Curve

Unemployment Rate

Short-Run Phillips Curve before and after Expansionary Policy,

with Long-Run Phillips Curve (NAIRU)

NAIRU and rational expectations

In the 1970s, new theories, such as rational expectations

and the NAIRU (non-accelerating ination rate of unemployment) arose to explain how stagation could occur. The latter theory, also known as the "natural rate of
unemployment", distinguished between the short-term
Phillips curve and the long-term one. The short-term
Phillips Curve looked like a normal Phillips Curve, but
shifted in the long run as expectations changed. In the
long run, only a single rate of unemployment (the NAIRU
or natural rate) was consistent with a stable ination
rate. The long-run Phillips Curve was thus vertical, so
there was no trade-o between ination and unemployment. Edmund Phelps won the Nobel Prize in Economics
in 2006 in part for this. However, the expectations argument was in fact very widely understood before his work
on it.[14]
In the diagram, the long-run Phillips curve is the vertical red line. The NAIRU theory says that when unemployment is at the rate dened by this line, ination will
be stable. However, in the short-run policymakers will
face an ination-unemployment rate tradeo marked by
the Initial Short-Run Phillips Curve in the graph. Policymakers can therefore reduce the unemployment rate
temporarily, moving from point A to point B through expansionary policy. However, according to the NAIRU,
exploiting this short-run tradeo will raise ination expectations, shifting the short-run curve rightward to the
New Short-Run Phillips Curve and moving the point
of equilibrium from B to C. Thus the reduction in unemployment below the Natural Rate will be temporary,
and lead only to higher ination in the long run.

THEORETICAL QUESTIONS

Since the short-run curve shifts outward due to the attempt to reduce unemployment, the expansionary policy
ultimately worsens the exploitable tradeo between unemployment and ination. That is, it results in more ination at each short-run unemployment rate. The name
NAIRU arises because with actual unemployment below it, ination accelerates, while with unemployment
above it, ination decelerates. With the actual rate equal
to it, ination is stable, neither accelerating nor decelerating. One practical use of this model was to provide an
explanation for stagation, which confounded the traditional Phillips curve.
The rational expectations theory said that expectations of
ination were equal to what actually happened, with some
minor and temporary errors. This in turn suggested that
the short-run period was so short that it was non-existent:
any eort to reduce unemployment below the NAIRU,
for example, would immediately cause inationary expectations to rise and thus imply that the policy would fail.
Unemployment would never deviate from the NAIRU except due to random and transitory mistakes in developing
expectations about future ination rates. In this perspective, any deviation of the actual unemployment rate from
the NAIRU was an illusion.
However, in the 1990s in the U.S., it became increasingly clear that the NAIRU did not have a unique equilibrium and could change in unpredictable ways. In the late
1990s, the actual unemployment rate fell below 4% of the
labor force, much lower than almost all estimates of the
NAIRU. But ination stayed very moderate rather than
accelerating. So, just as the Phillips curve had become a
subject of debate, so did the NAIRU.
Furthermore, the concept of rational expectations had become subject to much doubt when it became clear that the
main assumption of models based on it was that there exists a single (unique) equilibrium in the economy that is
set ahead of time, determined independently of demand
conditions. The experience of the 1990s suggests that this
assumption cannot be sustained.

4 Theoretical questions
The Phillips curve started as an empirical observation
in search of a theoretical explanation. Specically, the
Phillips curve tried to determine whether the inationunemployment link was causal or simply correlational.
There are several major explanations of the short-term
Phillips Curve regularity.
To Milton Friedman there is a short-term correlation between ination shocks and employment. When an inationary surprise occurs, workers are fooled into accepting
lower pay because they do not see the fall in real wages
right away. Firms hire them because they see the ination
as allowing higher prots for given nominal wages. This
is a movement along the Phillips curve as with change A.

7
Eventually, workers discover that real wages have fallen,
so they push for higher money wages. This causes the
Phillips curve to shift upward and to the right, as with
B. Some research underlines that some implicit and serious assumptions are actually in the background of the
Friedmanian Phillips curve. This information asymmetry and a special pattern of exibility of prices and wages
are both necessary if one wants to maintain the mechanism told by Friedman. However, as it is argued, these
presumptions remain completely unrevealed and theoretically ungrounded by Friedman.[15]

price/wage spiral. Supply shocks and changes in builtin ination are the main factors shifting the short-run
Phillips Curve and changing the trade-o. In this theory, it is not only inationary expectations that can cause
stagation. For example, the steep climb of oil prices
during the 1970s could have this result.
Changes in built-in ination follow the partial-adjustment
logic behind most theories of the NAIRU:
1. Low unemployment encourages high ination, as
with the simple Phillips curve. But if unemployment stays low and ination stays high for a long
time, as in the late 1960s in the U.S., both inationary expectations and the price/wage spiral accelerate. This shifts the short-run Phillips curve upward
and rightward, so that more ination is seen at any
given unemployment rate. (This is with shift B in
the diagram.)

Economists such as Milton Friedman and Edmund Phelps

reject this theory because it implies that workers suffer from money illusion. According to them, rational
workers would only react to real wages, that is, ination adjusted wages. However, one of the characteristics of a modern industrial economy is that workers do
not encounter their employers in an atomized and perfect
market. They operate in a complex combination of im2. High unemployment encourages low ination, again
perfect markets, monopolies, monopsonies, labor unions,
as with a simple Phillips curve. But if unemployand other institutions. In many cases, they may lack the
ment stays high and ination stays low for a long
bargaining power to act on their expectations, no matter
time, as in the early 1980s in the U.S., both inahow rational they are, or their perceptions, no matter how
tionary expectations and the price/wage spiral slow.
free of money illusion they are. It is not that high inaThis shifts the short-run Phillips curve downward
tion causes low unemployment (as in Milton Friedmans
and leftward, so that less ination is seen at each untheory) as much as vice versa: Low unemployment raises
employment rate.
worker bargaining power, allowing them to successfully
push for higher nominal wages. To protect prots, employers raise prices.
In between these two lies the NAIRU, where the Phillips
Similarly, built-in ination is not simply a matter of sub- curve does not have any inherent tendency to shift, so
jective inationary expectations but also reects the that the ination rate is stable. However, there seems
fact that high ination can gather momentum and con- to be a range in the middle between high and low
tinue beyond the time when it was started, due to the ob- where built-in ination stays stable. The ends of this
non-accelerating ination range of unemployment rates
jective price/wage spiral.
change over time.
However, other economists, like Jerey Herbener, argue
that price is market-determined and competitive rms
cannot simply raise prices. They reject the Phillips
curve entirely, concluding that unemployments inuence 5 See also
is only a small portion of a much larger ination pic Goodharts law
ture that includes prices of raw materials, intermediate
goods, cost of raising capital, worker productivity, land,
MONIAC Computer
and other factors.
New Keynesian economics

4.1

Gordons triangle model

Robert J. Gordon of Northwestern University has analyzed the Phillips curve to produce what he calls the
triangle model, in which the actual ination rate is determined by the sum of
1. demand pull or short-term Phillips curve ination,
2. cost push or supply shocks, and
3. built-in ination.
The last reects inationary expectations and the

Wage curve
ShapiroStiglitz theory

6 Notes
[1] Chang, R. (1997) Is Low Unemployment Inationary?" Federal Reserve Bank of Atlanta Economic Review
1Q97:4-13
[2] Phelan, John (23 October 2012). Milton Friedman and
the rise and fall of the Phillips Curve. thecommentator.com. Retrieved September 29, 2014.

8 FURTHER READING

[3] http://www.econlib.org/library/Enc/PhillipsCurve.html#
lfHendersonCEE2-126_figure_036
[4] MZM velocity
[5] Oliver Hossfeld (2010) US Money Demand, Monetary
Overhang, and Ination Prediction International Network
for Economic Research working paper no. 2010.4
[6] I Discovered the Phillips Curve: A Statistical Relation between Unemployment and Price Changes Irving
Fisher. The Journal of Political Economy, Vol. 81, No. 2,
Part 1 (Mar. - Apr., 1973), pp. 496-502. Reprint of 1926
article by Irving Fisher.
[7] Forder, James (2014). Macroeconomics and the Phillips
curve myth. Oxford University Press.
[8] Domitrovic, Brain (10 October 2011). The Economics
Nobel Goes to Sargent & Sims: Attackers of the Phillips
Curve. Forbes.com. Retrieved 12 October 2011.
[9] Analytical Aspects of Anti-Ination Policy Paul H.
Samuelson; Robert M. Solow American Economic
Reivew Vol. 50, No. 2, Papers and Proceedings of the
Seventy-second Annual Meeting of the American Economic Association (May, 1960), 177-194.

Blanchard, Olivier; Gal, Jordi (2007). Real Wage

Rigidities and the New Keynesian Model. Journal of Money, Credit, and Banking 39 (s1): 3565.
doi:10.1111/j.1538-4616.2007.00015.x.
Clarida, Richard; Gal, Jordi; Gertler, Mark
(1999). The science of monetary policy: a NewKeynesian perspective. Journal of Economic Literature (American Economic Association) 37 (4):
16611707. doi:10.1257/jel.37.4.1661. JSTOR
2565488.
Fisher, Irving (1973). I discovered the Phillips
curve: A statistical relation between unemployment
and price changes". Journal of Political Economy
(The University of Chicago Press) 81 (2): 496502.
doi:10.1086/260048. JSTOR 1830534. Reprinted
from 1926 edition of International Labour Review.
Forder, James (2014). Macroeconomics and the
Phillips curve myth. Oxford: Oxford University
Press. ISBN 9780199683659.
Friedman, Milton (1968). The role of monetary
policy. American Economic Review 68 (1): 117.
JSTOR 1831652.

[10] George A. Akerlof, William T. Dickens, and George L.

Perry, Near-Rational Wage and Price Setting and the
Long-Run Phillips Curve, Brookings Papers on Economic Activity , Vol. 2000, No. 1 (2000), pp. 1-60

Galbcs, Peter (2015). The Theory of New Classical Macroeconomics. A Positive Critique. Heidelberg/New York/Dordrecht/London: Springer.
ISBN 978-3-319-17578-2.

[11] Roberts, John M. (1995). New Keynesian Economics

and the Phillips Curve. Journal of Money, Credit and
Banking 27 (4): 975984. JSTOR 2077783.

Keynes, John Maynard (1936) The General Theory

of Employment, Interest and Money

[12] Clarida, Richard; Gal, Jordi; Gertler, Mark (2000).

Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory.
The Quarterly Journal of Economics 115 (1):
147180.
doi:10.1162/003355300554692.
[13] Romer, David (2012). Dynamic Stochastic General
Equilibrium Models of Fluctuation. Advanced Macroeconomics. New York: McGraw-Hill Irwin. pp. 312364.
ISBN 978-0-07-351137-5.
[14] Forder, James (2010). The historical place of the
'Friedman-Phelps expectations critique. European Journal of the History of Economic Thought 17 (3): 493511.
doi:10.1080/09672560903114875.
[15] Galbcs, Peter (2015). The Theory of New Classical
Macroeconomics. A Positive Critique. Heidelberg/New
York/Dordrecht/London: Springer. doi:10.1007/978-3319-17578-2. ISBN 978-3-319-17578-2.

References
Blanchard, Olivier (2000). Macroeconomics (Second ed.). Prentice Hall. ISBN 0-13-013306-X.

Phillips, A. W. (1958). The Relationship between

Unemployment and the Rate of Change of Money
Wages in the United Kingdom 1861-1957. Economica 25 (100): 283299. doi:10.1111/j.14680335.1958.tb00003.x.
Salsman, Richard M. (1997). The Cross and the
Curve. The Intellectual Activist 11 (3): 920. ISSN
0730-2355.

8 Further reading
Federal Reserve Bank of Boston, Understanding
Ination and the Implications for Monetary Policy: A Phillips Curve Retrospective, FRBB Conference Series 53, June 911, 2008, Chatham, Massachusetts.
Gordon, Robert J. (2011). The History of the
Phillips Curve: Consensus and Bifurcation. Economica 78 (309): 1050. doi:10.1111/j.14680335.2009.00815.x.
Hoover, Kevin D. (2008). Phillips Curve. In
David R. Henderson (ed.). Concise Encyclopedia

9
of Economics (2nd ed.). Indianapolis: Library of
Economics and Liberty. ISBN 978-0865976658.
OCLC 237794267.
Qin, Duo (2011). The Phillips Curve from the Perspective of the History of Econometrics. History
of Political Economy 43 (Suppl. 1): 283308.
doi:10.1215/00182702-1158763.

External links
Left critique of Phillips Curve from Dollars & Sense
magazine
A Critique of the Phillips Curve by Charles Oliver,
Ludwig von Mises Institute, February 9, 1999 (includes the article "Whos Afraid Of A Red-Hot Economy?", Investors Business Daily, February 9, 1999)
Audio speech by Jeery Herbener at the Ludwig
Von Mises Institute.

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