A Neglected Inconsistency in Milton Friedman's AEA Presidential Address

Sep 2014 | 723

Authors: James Forder

Friedman (1968) - his famous Presidential Address to the American Economic Association - contains an elementary error right at the heart of what is usually supposed to be the paper's crucial argument.  That is the argument to the effect that during an inflation, changing expectations shift in Phillips curve.  It is suggested that the fact of this mistake, and of its having gone all-but unnoticed are points of historical interest.  Further reflections, drawing on the arguments of Forder (2014) Macroeconomics and the Phillips curve myth, are suggested.

JEL Codes: B22, E31

Keywords: Phillips, Friedman, Expectations

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