The Elgar Companion to John Maynard Keynes
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The Elgar Companion to John Maynard Keynes

Edited by Robert W. Dimand and Harald Hagemann

The most influential and controversial economist of the twentieth century, John Maynard Keynes was the leading founder of modern macroeconomics, and was also an important historical figure as a critic of the Versailles Peace Treaty after World War I and an architect of the Bretton Woods international monetary system after World War II. This comprehensive Companion elucidates his contributions, his significance, his historical context and his continuing legacy.
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Chapter 86: The Phillips curve

James Forder


The idea of a negative relationship between wage change or inflation and unemployment was well known in economics before Phillips suggested that a single numerical relationship explained British data over nearly 100 years. That idea was never accepted, and although “the Phillips curve” became famous, it was understood in a variety of other ways. When invoked in policy discussion in the 1960s it was usually in the cause of arguing for higher unemployment as the only means of stopping inflation. In the mid-1970s, a fictitious story of it having provided a Keynesian rational for inflationary policy came to be told, and widely believed. Later economics has tended to presume a Phillips-type relationship to be central to macroeconomic understanding, although the earlier literature offered many alternatives. However, the earlier ideas are ignored, perhaps because they seem tainted by the alleged foolishness of policy thinking of that era.

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