Friedman And Phelps. Together with milton friedman edmund phelps is responsible for elaborating the concept of the natural rate of unemployment in the end of the 1960 s although they have worked independently in their respective elaborations. An article written the same year by economist edmund phelps constituted an additional surgical strike and taken together the friedman phelps fusillade would leave macroeconomics forever changed.
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They argued that well informed rational employers and workers would pay attention only to real wages the inflation adjusted purchasing power of money wages. 1968 and in milton friedman s 1968 presidential address to the american economics association. Changes in inflationary expectations cause shifts in the phillips curve.
The natural rate of unemployment is the name that was given to a key concept in the study of economic activity.
Changes in inflationary expectations cause shifts in the phillips curve. In the late 1960s the stable negatively sloped phillips curve was overturned by the friedman phelps natural rate model. Together with milton friedman edmund phelps is responsible for elaborating the concept of the natural rate of unemployment in the end of the 1960 s although they have worked independently in their respective elaborations. Phelps sought to explain the phenomenon of stagflation or the instability of the phillips curve in terms of inflationary expectations.
