Few economists in the post-war period have made such a lasting impression on macroeconomic policy as Alban William Housego `Bill\u27 Phillips. The empirical Curve, with which he is most often associated, examined wage inflation and unemployment data for the United Kingdom for 1861-1957, with a view to gauging the size of the equilibrant forces that would be necessary to reduce the swing of the business cycle `pendulum\u27. The idea of an inflation-unemployment `trade-off\u27 derived from a glance at this Curve, was `snatched at\u27 first by American Keynesians, and, in an extraordinarily brief period of time, it became the cornerstone of applied macroeconomics. In the process, much of the subtlety of Phillips\u27 analysis was replaced by wishful thinking about the potency of macroeconomic manipulation. Phillips\u27 zero inflation advocacy was, likewise, replaced by the belief that ongoing inflation would purchase sustainable reductions in unemployment. Keynesian advocates, in their moment of apparent triumph, gave a hostage to fortune which Milton Friedman, and others, brilliantly exploited, thus facilitating the monetarist counter-revolution.
ISBN: 185898145
