Welcome to Scribd. Sign in or start your free trial to enjoy unlimited e-books, audiobooks & documents.Find out more
Download
Standard view
Full view
of .
Look up keyword
Like this
5Activity
0 of .
Results for:
No results containing your search query
P. 1
A. W. Phillips - Employment, Inflation and Growth

A. W. Phillips - Employment, Inflation and Growth

Ratings: (0)|Views: 135|Likes:
Published by filipso kreive

More info:

Published by: filipso kreive on Nov 26, 2008
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

11/22/2013

pdf

text

original

 
The Suntory and Toyota International Centres for Economics and Related Disciplines
Employment, Inflation and GrowthAuthor(s): A. W. PhillipsSource:
Economica,
New Series, Vol. 29, No. 113 (Feb., 1962), pp. 1-16Published by: Blackwell Publishing on behalf of The London School of Economics and PoliticalScience and The Suntory and Toyota International Centres for Economics and RelatedDisciplinesStable URL:
Accessed: 08/11/2008 10:51
Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available athttp://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unlessyou have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and youmay use content in the JSTOR archive only for your personal, non-commercial use.Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained athttp://www.jstor.org/action/showPublisher?publisherCode=black .Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printedpage of such transmission.JSTOR is a not-for-profit organization founded in 1995 to build trusted digital archives for scholarship. We work with thescholarly community to preserve their work and the materials they rely upon, and to build a common research platform thatpromotes the discovery and use of these resources. For more information about JSTOR, please contact support@jstor.org.
The London School of Economics and Political Science
,
 Blackwell Publishing
,
The Suntory and Toyota International Centres for Economics and Related Disciplines
are collaborating with JSTOR to digitize,preserve and extend access to
 Economica.
http://www.jstor.org
 
1962]
Employment,Inflationand Growth'
ByA. W. PHILLIPS
1.INTRODUCTION
Sincetheend of the secondworldwar economicpolicy and con-troversyn Britainhavebeendirectedowaysofattaininganumberof related objectives,prominentamong whichare the maintenanceof ahighandstablelevel ofemployment,easonabletabilityof theaverageevelof finalproductprices,afairly rapidrate ofeconomicgrowth,a satisfactoryalanceofforeignradeandreasonabletabilityofforeignexchangerates.Itcanhardlybe claimedthat there hasbeen completesuccess in theattainmentoftheseobjectives. Itistruethatemploymentas beenmaintainedt anextremelyhighlevel.The averageevelofunemploymentince1948hasbeen little morethan1percent.of the work force.Thisisprobablyalowerlevelofunemploymenthanthat attainednany single yearinpeacetimeduringtheprevious century, except perhapsin 1872.Evenintheboomyearsof thepre-warradecyclethepercentageftradeunionistsunemployedarelyell below2percent.and overthe53years from1861to1913itaveraged
2
percent.The actions taken toimprovethestabilityof thesystemhavealso hadsomemeasureofsuccess.Beforethefirstworld wartherewasafairly regularradecycle withanaverageperiodof abouteight years, duringwhichtradeunionunemploymentluctuatedbetweenabout2and 10percent.Sincethesecondworldwar thecyclicalmovementsn economicactivityhavebecomemorerapid,withaperiodof fouror fiveyears,butthefluctuationshavebeen smaller.Unemployment,ndeed,hasonlyfluctuatedbetweenabout1percent.and21percent.,thatis,over arangeofabout
12
percent.,but thepercentageluctuationsngrossnationalproductaboutthegrowthtrend have beenabout fivetimesaslargeasthis,2therangeofthefluctuationsas apercentageofthetrendbeingabout7 or 8percent. Between1948and1960, grossnationalproductincreasedatanaveragerate of about2ipercent.perannumandproductivityperman houratperhaps1lpercent.perannum.Thoughhese ratesof increaseprobablycompareavour-ablywiththose in earlierperiodsof Britishhistory theyarelowerthanthoseof a number of other industrialcountries inthe sameperiod.Theaverageateof rise of the retailpriceindexbetween1948and1960was 3.7percent.perannum.Therewould befairly generalagreementhat this rateofinflationsundesirable.Ithasundoubtedly
1
Inaugurallecturegivenatthe LondonSchool ofEconomics andPoliticalScienceon 28thNovember,1961.
2
See F.W.Paish,
"
Output,InflationandGrowth",to be published.
1
A
 
2
ECONOMICA[FEBRUARY
beena majorcauseofthegeneralweaknessofthebalanceofpaymentsand theforeignreserves,and if continuedt would almostcertainlymakethepresentrateofexchangeuntenable.It is my belief thatoneof the main reasonsforthe difficulties hathavebeenexperiencedndevisingandimplementingappropriateeconomic policiesis lack ofadequate quantitativeknowledge andunderstandingfhow the economicsystemworks.Ofcourse, econ-omists do understand,n ageneralsortofway, quite a lot about theworkingof the economicsystemand donow haveamassofquantita-tive informationaboutimportanteconomicvariables.Butinorderto bringthisknowledgeobear ontheproblemofformulating ndattainingaconsistentet ofpolicyobjectiveswerequirealsoknowledgeofthe quantitativeelationsbetweeneconomicvariables.Inparticularit isnecessaryoknowwhatquantitativeelationsholdbetween hoseeconomicvariableswhich are eithertheobjectivesofpolicyortheinstruments hroughwhichweattempttoattaintheobjectives.Forexample,f some relationholds,ingiveninstitutionalconditionsandonaverageover aperiodofyears,betweenthelevel ofemploymentandthespeedofinflation,failureto take accountofitmaylead tothe adoptionofinconsistentobjectivesandtoatypeofschizophrenicbehaviourasattemptsare madetoattaintheseinconsistentaims.Knowledgeof the relationwouldlead either to modificationoftheobjectivesto makethemconsistentorperhaps,sinceaneconomicrelationsonlytheresultoffairlyregularpatternsofhumanbehaviour,tosomemodificationofinstitutionsorbehaviourwhichwould altertherelationsoastopermitsome more desirablecombinationsofconsistentaims.Oragain,if atacertaintimeunemploymentsfelttobetoohighandshort-term nterestrates areloweredinordertoraisethedemandforgoodsandsoforlabour,howlargewilltheeffectsbeandwhenwillthey occur;willthehigherdemand alsoleadto an increasenfixednvestmentndif sohowlargeanincreaseandafterwhatintervaloftime;willwageratesandpricesrisemorerapidlyasaresultofthehigher demand;ifinternal demandandpricesrise willimportsriseandexports fall,and if sowhen and byhowmuch?If we are to assessthe effectsof ourattemptsoinfluencethecourseofeconomicaffairsweneedanswers,numericalanswers,toquestionsikethese.Ifwe do nothavethisknowledgehepolicyadjustmentswill almostcertainlybeinappropriatenmagnitudeortimingor both andmaywellcause,as I believeheyhaveoftencausedinthepast,unnecessaryndharmful luctuationsn economicactivity.Wemayobtain tentativeestimatesofaquantitativerelationineconomicsby makingapreliminary ubjectiveanalysisofhumanmotivationandbehaviourand thencarryingouta statisticalanalysisofrelevantdatafrom pastrecords.We alsoneed toinvestigate hedegreeof errorhattheremaybe intheestimate,heextent towhichtherelationn successivehorttimeperiods departsrom itsaverageoverlongerperiodsandwhetherheresanyevidencehat theaverage

Activity (5)

You've already reviewed this. Edit your review.
1 thousand reads
1 hundred reads
Amitabha Sinha liked this
cmab liked this
mskare liked this

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->