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A.W. Phillips and his curve: Stabilisation policies, inflation expectations and the ‘menu of choice’

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  • Johannes A. Schwarzer

Abstract

This paper investigates the interpretation of the Phillips curve by Phillips himself. It will be shown that Phillips primarily understood his curve as a disequilibrium relation to be used in his models on stabilisation policies and not necessarily as a long-run ‘menu of choice’ between inflation and unemployment, even though Phillips did not oppose and sometimes even appears to have endorsed this interpretation. Inflation expectations are discussed by Phillips as well. Contrary to Friedman, price expectations drive his system from the demand side but not from the supply side of the economy. Nonetheless, price expectations may induce dynamic instability.

Suggested Citation

  • Johannes A. Schwarzer, 2012. "A.W. Phillips and his curve: Stabilisation policies, inflation expectations and the ‘menu of choice’," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 19(6), pages 976-1003, December.
    • Handle: RePEc:taf:eujhet:v:19:y:2012:i:6:p:976-1003
    DOI: 10.1080/09672567.2012.735686
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    References listed on IDEAS

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    1. David Laidler, 2012. "Milton Friedman's Contributions to Macroeconomics and Their Influence," University of Western Ontario, Economic Policy Research Institute Working Papers 20122, University of Western Ontario, Economic Policy Research Institute.
    2. Vasilev, Aleksandar & Maksumov, Rashid, 2010. "Critical analysis of Chapter 23 of Keynes’s Notes on Mercantilism in The General Theory of Employment, Interest and Money (1936)," EconStor Research Reports 155318, ZBW - Leibniz Information Centre for Economics.
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    Cited by:

    1. Scobie, Grant M, 2020. "If Bill Phillips were Governor ...? Some implications of his work for contemporary macroeconomic policy," Working Paper Series 21096, Victoria University of Wellington, Chair in Public Finance.
    2. Johannes A. Schwarzer, 2018. "Retrospectives: Cost-Push and Demand-Pull Inflation: Milton Friedman and the "Cruel Dilemma"," Journal of Economic Perspectives, American Economic Association, vol. 32(1), pages 195-210, Winter.

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