LGS 200 Lecture Notes - Lecture 22: Paul Samuelson, Phillips Curve, Robert Solow
9 May 2017
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In the long run, inflation & unemployment are unrelated: The inflation rate depends mainly on growth in the money supply. Unemployment (cid:523)the (cid:498)natural rate(cid:499)(cid:524) depends on the minimum wage, the market power of unions, efficiency wages, and the process of job search: one of the ten principles: In the short run, society faces a trade-off between inflation and unemployment. The phillips curve: phillips curve: shows the short-run trade-ff between inflation and unemployment, 1958: a. w. Phillips showed that nominal wage growth was negatively: 1960: paul samuelson & robert solow found a negative correlation between correlated with unemployment in the u. k. U. s. inflation & unemployment, named it (cid:498)the phillips curve(cid:499) The phillips curve: a policy menu: since the fiscal and money policy affect aggregate demand, the phillips. Curve appeared to offer policymakers a menu of choices: Anything in between: 1960s: u. s. data supported the phillips curve. May believed the pc was stable and reliable.
