Abstract

RAFFO LOPEZ, Leonardo. A Discussion on Friedman's Phillips Curve and the Natural Rate of Unemployment. Lect. Econ. [online]. 2007, n.67, pp.119-142. ISSN 0120-2596.

In this paper I evaluate the theoretical consistency of Friedman's Phillips curve. For this, I review his own exposition in the subject, making emphasis in his contributions to the short-run analysis of unemployment, wages and prices in front of the classical theory and Keynes's "General Theory". I examine his hypothesis founded in the natural rate of unemployment, looking at the use of concepts like involuntary unemployment, macroeconomic equilibrium and imperfect information, and also at the mechanism of expectation's formation for workers and entrepreneurships. My conclusion is that his model is incomplete and imperfect, and that his hypothesis tumbles down if the natural rate of unemployment is endogenous and changes with the exogenous chocks in aggregate demand.

Keywords : Phillips curve; involuntary unemployment; natural rate of unemployment; imperfect information; adaptative expectations.

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