Real-World Economics Review Blog
from Thomas Palley
There is an old story about a policeman who sees a drunk looking for something under a streetlight and asks what he is looking for. The drunk replies he has lost his car keys and the policeman joins in the search. A few minutes later the policeman asks if he is sure he lost them here and the drunk replies “No, I lost them in the park.” The policeman then asks “So why are you looking here?” to which the drunk replies “Because this is where the light is.”That story has much relevance for the economics profession’s approach to the Phillips curve.
Recently, there has been another flare-up in discussion of the Phillips curve involving Paul Krugman [Here], Chris House [Here], and Simon Wren-Lewis [Here]. It is précised by Mark Thoma [Here].
The question triggering the discussion is can Phillips curve (PC) theory…
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