Friedman's Nobel Lecture reconsidered

James Forder

No 398, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: In his Nobel lecture, Friedman built on his earlier argument for a 'natural rate of unemployment' by painting a picture of an economics profession which, as a result of foolish mistakes, had accepted the Phillips curve as offering a lasting trade-off between inflation and unemployment and were thereby led to advocate a policy of inflation. It is argued here that in fact the orthodox economists of the time did not accept Phillips' analysis; almost no one made the mistakes in question; and very few advocated inflation on bases vulnerable to Friedman's theoretical critique. The Phillips curve was put to various uses, but advocating inflation was hardly amongst them. It is suggested that one lasting result of the uncritical acceptance of Friedman's history is to limit what appears to be within the reasonable range of views about macroeconomic policy.

Keywords: Phillips Curve; Inflation; Friedman (search for similar items in EconPapers)
JEL-codes: B22 B31 E12 (search for similar items in EconPapers)
Date: 2008-07-01
New Economics Papers: this item is included in nep-cba, nep-his, nep-hpe, nep-mac, nep-mon and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:oxf:wpaper:398

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