Economics

Cutting unemployment and cutting inflation used to be a straight tradeoff

In 1958, economist Bill Phillips plotted nearly a century of UK wage and unemployment data and found a clear pattern: when unemployment fell, wage inflation rose, and vice versa. Economists built decades of policy around this tradeoff — until 1970s stagflation, when unemployment and inflation rose together, bearing out Milton Friedman's prediction that the tradeoff only holds in the short run.

A. W. Phillips, The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957 — Economica, 1958

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