Abstract
This article has two purposes. First, to examine the assumption that it is possible to map uniquely between unemployment and excess demand for labor; this assumption plays a key role in the theory of the Phillips curve. We show that as both unemployment and excess demand for labor are endogenous and simultaneously determined, in general it is not possible to obtain a unique mapping between unemployment and excess demand for labor and that the Lipsey and Barro and Grossman derivations of the Phillips curve are invalid. Secondly, the article recommends that wage, employment, and unemployment behavior be modelled using short-run supply and demand curves, that is, in a Marshall-Hicks temporary equilibrium framework.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
