In the long run we are all unemployed?

Citation data:

The Quarterly Review of Economics and Finance, ISSN: 1062-9769, Vol: 64, Page: 67-81

Publication Year:
2017
Usage 87
Abstract Views 80
Link-outs 7
Captures 10
Readers 9
Exports-Saves 1
Social Media 163
Shares, Likes & Comments 163
Citations 1
Citation Indexes 1
DOI:
10.1016/j.qref.2016.07.003
Author(s):
Karl-Friedrich Israel
Publisher(s):
Elsevier BV
Tags:
Economics, Econometrics and Finance
article description
In this paper a brief history of the Phillips curve is sketched. Empirical evidence from France, Germany, the United Kingdom and the United States during the latter half of the 20th century in support of a positive long-run relationship between price inflation and unemployment is presented. In order to reconcile the predominant theoretical view, which holds that inflation is neutral in the long run, with the observed data, two arguments are outlined, both of which build on unintended consequences of monetary expansion: (1) redistributional effects on incomes and wealth, and (2) business cycle fluctuations. The analysis hinges on further political interventions in response to these consequences, which tend to increase unemployment as they render labor markets less flexible. In this sense the relationship between price inflation and unemployment over the past 60 years can in part be interpreted as the outcome of an interventionist spiral.