ECO 2013 Lecture Notes - Lecture 28: United Automobile Workers, Phillips Curve, Frictional Unemployment
Document Summary
Final!!: monday at 7:30am, 80 questions. 70% old: concept map is on canvas. 17. 1 the discovery of the short-run trade-off between unemployment and inflation (continued) During the 1960"s: early: inflation was low, unemployment was high, late: unemployment decreased, inflation increased. 1968: milton freidman of university of chicago. Phillips curve did not represent a permanent tradeoff between unemployment and inflation: at the same time, edmond phelps of columbia university published a paper making the same argument. Nobel prize 2006: argued that if the lras curve is vertical (not affected by price level), then the. Long-run phillips curve (trade-off between unemployment and inflation) must be vertical or the lras is inconsistent: summary: friedman and phelps argued that there is no trade-off between unemployment and inflation in the long-run. Structural and frictional unemployment exists: friedman defines the natural rate of unemployment as: Prices don"t affect real gdp because we get back to equilibrium: same thing with inflation (price changes) and unemployment.
