Keynes's Employment Function and the Gratuitous Phillips Curve Disaster

Egmont Kakarot-Handtke ()

Economics Working Paper Archive from Levy Economics Institute

Abstract: Keynes had many plausible things to say about unemployment and its causes. His "mercurial mind," though, relied on intuition, which means that he could not strictly prove his hypotheses. This explains why Keynes's ideas immediately invited bastardizations. One of them, the Phillips curve synthesis, turned out to be fatal. This paper identifies Keynes's undifferentiated employment function as a sore spot. It is replaced by the structural employment function, which also supersedes the bastard Phillips curve. The paper demonstrates in a formal and rigorous manner why there is no trade-off between price inflation and unemployment.

Keywords: New Framework of Concepts; Structure-centric; Axiom Set; Say's Regime; Keynes's Regime; Market Clearing; Full Employment; Product Price Flexibility; Intertemporal Budget Balancing; Multiplier; Trade-Off; Price Inflation; Wage Inflation (search for similar items in EconPapers)
JEL-codes: E12 E24 (search for similar items in EconPapers)
Date: 2013-08
New Economics Papers: this item is included in nep-hpe, nep-mac and nep-pke
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Related works:
Working Paper: Keynes’s employment function and the gratuitous Phillips curve disaster (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:lev:wrkpap:wp_773

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