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London School of Economics and Political Science Image Library
London School of Economics and Political Science Image Library
When economists and policymakers talk about how to control inflation, they often make the assumption that reducing inflation will likely lead to some layoffs and unemployment. But that hasn’t been the case since inflation spiked last year. Instead, so far, inflation has fallen and unemployment has remained low.
So where did the idea of this trade-off between inflation and unemployment come from?
The story begins in the 1940s with Bill Phillips, a soft-spoken electrical engineer turned crocodile hunter turned economist. Phillips was a firm believer in the existence of underlying forces in the economy. He believed that if macroeconomists could understand how those forces worked, they could keep the economy stable.
Today’s show will discuss how the Phillips Curve was born, why it became mainstream, and why universal truths in macroeconomics remain elusive.
This episode was hosted by Willa Rubin and Nick Fountain and produced by Sam Yellowhorse Kesler. It was edited by Molly Messick and designed by Maggie Luthar. Sierra Juarez fact-checked.
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