The Economics of the Phillips Curve: Formation of Inflation Expectations versus Incorporation of Inflation Expectations

Arbeitspapier

This paper examines the theory of the Phillips curve, focusing on the distinction between "formation" of inflation expectations and "incorporation" of inflation expectations. Phillips curve theory has largely focused on the former. Explaining the Phillips curve by reference to expectation formation keeps Phillips curve theory in the policy orbit of natural rate thinking where there is no welfare justification for higher inflation even if there is a permanent inflation - unemployment trade-off. Explaining the Phillips curve by reference to incorporation of inflation expectations breaks that orbit and provides a welfare economics rationale for Keynesian activist policies that reduce unemployment at the cost of higher inflation.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IMK Working Paper ; No. 4/2011

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Macroeconomics and Monetary Economics: General ; Price Level; Inflation; Deflation ; Monetary Policy
• Thema: Phillips curve ; formation of inflation expectations ; incorporation of inflation expectations ; backward bending Phillips curve. ; Phillips-Kurve ; Inflationserwartung ; Keynesianismus ; Theorie

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Palley, Thomas I.
• Ereignis: Veröffentlichung
• (wer): Hans-Böckler-Stiftung, Institut für Makroökonomie und Konjunkturforschung (IMK)
• (wo): Düsseldorf
• (wann): 2011

Weitere Informationen

• Handle: http://hdl.handle.net/10419/105946
• URN: urn:nbn:de:101:1-201202285186
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ