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Two Econometric Replications:

The Historic Phillips and Lipsey-Phillips


Curves
Nancy J. Wulwick

Introduction: On Replication

To replicate has two meanings in science. In one sense, to replicate


means to repeat the results of experiments under varying experimental
circumstances. Scientists in that context are testing their explanations
of established phenomena. To replicate also means to repeat entire experiments. By duplicating, or successfully checking experiments, scientists establish that there is a phenomenon to be explained (Collins 1991;
Cartwright 1991; Backhouse 1992). This essay is concerned with replication in economics in the sense of repeating entire experiments or, their
economic counterpart, econometric studies.
The traditional view in the experimental sciences is that the possibility
of repeating experiments forms the basis of objective knowledge. How
much repetition has actually occurred in the experimental sciences is
a controversial matter. Certainly scientists have checked experiments
that produced dubious results and treated a failed repetition as a strong
negative criterion bearing against the original research (Mulkay and
Gilbert 1991, 164). Notable failures to repeat experiments have marked
the history of science (Harr6 1981,175-76; Frank 1986,140-62,175-76;
Chamberlain 1990, 136-45; Hoover 1993,259).
Correspondence may be addressed to Professor Nancy J. Wulwick, Department of Economics,
State University of New York, PO Box 6000, Binghamton NY 13902-6000. I thank T. Mayer,
M. Lovell, J. J. Thomas, H. Collins, and the Binghamton University Economics Department
Seminar for their comments.
History of Political Economy 2813 @ 1996 by Duke University Press.

392 History of Political Economy 28:3 (1 996)


The credo of experimental repetition never has taken hold in economics. The formal education of economists generally ignores the matter
of keeping records that might be obtained quickly and made available to
other people. Econometrics courses teach students necessary techniques
and mathematical proofs of important theorems, but the standards of
workmanship do not include the preparation of data-a basic component of the curricula in the hard sciences. In light of their education, it is
not surprising that economists rarely check the econometric work of their
colleagues and that attempts to do so have been disappointing (Dewald,
Thursby, and Anderson 1986; Fuess 1993, 12; Feigenbaum and Levy
1993,225).
Some economists have opposed the idea of having to repeat econometric studies (Collins 1993; Mirowski and Sklivas 1991; Mirowski 1993).
They have argued that checking published research wastes time. Nobody
reads, much less cites, the great mass of economic articles. Any mistakes
in the few important papers, the critics have argued, will be discovered
as other researchers use the findings in their own work. From that perspective, that no one until now has published a check on Lipseys famous
Phillips curve paper remains an unexplained anomaly.
Critics of checking published research also have argued that conditions required to repeat studies do not exist. They suggest three main
problems with exact replication: The time-series data cited in the original study are continuously updated. The algorithms used in computing
hardware and software are not completely standardized and change over
time. The interests of the original researchers and the checkers conflict
since refutations are easier to publish, so original researchers often withhold their data (Anderson and Dewald 1994, 80).2In the hard sciences,
despite those problems, the importance of other researchers being able to
reproduce ones own experiments is unquestioned (Mulkay and Gilbert
1991). The three problems loom large in economics mainly because its
researchers customarily neglect to maintain careful, detailed, complete
reports of their econometric studies. This essay attempts to repeat two
1. There is no evidence in the English-languagejournal articles from 1960 to 1980 that cite
Lipsey 1960 of any checks on it (Social Science Citation Index-five-year cumulative indexes).
Not check of Lipsey 1960 is commonly known to those who have done research on the Phillips
curve.
2. Admittedly, a universal command to disseminate original data conflicts with the implicit
property rights of original researchers and thus the incentive to do research. The scholarly
community recognizes instances when withholding data is appropriate.

Wulwick / Two Econometric Replications 393


crucial econometric studies: A. W. H. Phillipss (1958a) estimation of
a negative relation between the rates of inflation and unemployment by
means of a sophisticated application of a time-honored, simple statistical
method, and the replication of the Phillips curve by R. G. Lipsey, who
applied to Phillipss data ordinary least squares, which economists by
1960 had accepted as the standard statistical method (Lipsey 1960).3 I
find that Phillipss original study can be repeated closely, while Lipseys
results are in certain important respects not reproducible. Yet economists
have tended to favor Lipseys study because Lipsey used a more familiar
method of estimation. I trace the difference in the repeatability of the two
studies to the research practices of the two economists. Phillips, with his
engineering background, kept careful records of his work. Lipsey, whose
major contributions were in economic theory, apparently tried many formulations and published the best without reporting how he arrived
at it.
This article falls into two main parts. The first part attends to Phillipss
estimation and the next deals with Lipseys replication. Checking econometric studies requires knowledge of the context in which the researchers
worked. Thus, this article explores the researchers technical backgrounds
and modes of thinking, the relevant contemporary scientific literature,
the available computing equipment, and the statistical conventions of the
1950s. In expounding the rationale behind the two studies, this article
explains the research problem that Phillips and Lipsey each sought to
solve and why they thought that their solutions were appropriate (Popper
1968,3547). I report what the researchers said they did in their studies,
what they actually did, what they could have done but did not do, and
what difference their choices made to the final results. This methodologically motivated exercise of checking Phillipss and Lipseys empirical
work deepens our understanding of the nature of the Phillips curve as a
hypothetical construct.

Repeating Phillipss Study


A. W. H. Phillips, as his mentor James Meade remarked, should not

go down to history just as the Phillips curve chap (letter to the author, 3 February 1986). The curve was only a major incident in the
3. I develop the distinction between the estimating methods of Phillips 1958a and Lipsey
1960 originally made by C. L. Gilbert (1976).

394 History of Political Economy 28:3 (1996)


general progress of Phillipss studies on time-series modeling and classical control systems, which are also identified with his name (Salmon
1982, 622). His contributions to economics lay in the field of dynamic
macroeconomic control, which he approached from the perspective of
an electrical engineer, his original profession.
Phillips (b. 1914-d.1975), who grew up in New Zealand, possessed an
ability to innovate that was in line with the New Zealand worship of
improvisation (Bergstrom 1978, xi). He became an apprenticed electrician before finishing high school and, while working as an electrical
fitter in private homes, found himself having to concoct makeshift arrangements to get desired r e s ~ l t sHaving
.~
learned differential equations
through a correspondence course with the British Institute of Technology, he passed the examinations of the Institute of Electrical Engineers
shortly after coming to London in the late 1930s. During the Depression,
engineering education promoted social engineering, which may have influenced Phillips to pursue a sociology degree at the London School
of Economics (LSE) on a veterans scholarship after serving in World
War I1 (Montgomery and Becklund 1938, 133). While an undergraduate,
Phillips built a hydraulic machine of the macroeconomy with the help
of W. Newlyn (Phillips 1950; Newlyn 1992). Phillipss demonstration
of the innovative machine to the economics department won Phillips an
assistant lectureship in economics at the LSE in 1950.
Using the hydraulic simulator to clarify his ideas, Phillips applied
principles of engineering control to the control of the macroeconomy
(Phillips 1953; Wulwick 1989, 84-85, 88). In engineering terminology,
the economy was a negative-feedback system that eliminated deviations
between the systems actual and equilibrium state^.^ Phillips identified
various types of feedback mechanisms to correct deviations in output,
including a proportional control dependent on the size of the deviation.
In light of the Samuelson-Hansen microeconomic stability equation,
Phillips treated price flexibility as a proportional stabilizer. A nonlinear curve, later known as the Phillips curve, showed the rate of change
of the price level (or the money-wage level) as a varying proportion of
the difference between the actual and the equilibrium level of output
4. Oral communication to the author from M. Perlman at the annual meetings of the History
of Economics Society, Philadelphia, 26-29 June 1993.
5. M. Friedman learned of adaptive expectations, which obey a feedback-based rule, from
Phillips (Friedmans address in honor of his eightieth birthday to the annual meetings of the
Western Economic Association, San Francisco, California, 9-13 July 1992).

Wulwick / Two Econometric Replications 395


(Phillips 1953, 3 1; 1954, 307). The curves hyperbolic shape indicated
money-wage inflexibility in the presence of demand-deficient unemployment and accentuated the effects on wage inflation of increased excess
demand for labor. Phillipss election in 1958 to the LSEs Tooke Chair
of Economics and Statistics (held previously by Friedrich von Hayek)
had little to do with the Phillips curve, to which he gave an empirical
grounding during Englands national debate over the control of creeping
inflation (Phillips 1958a; letter to the author from J. Meade, 3 February
1986).
Stressing that control of the economy required quantification, Phillips
was one of the pioneers of time-series estimation (Phillips 1958b). He
defined conditions that, if satisfied, permitted the consistent estimation
of a distributed lag equation in which the regressors figured as causal
variables, in the sense developed by Clive Granger and Christopher Sims
(Phillips 1956). He proposed a method of obtaining consistent and efficient estimates of the parameters of simultaneous equation systems in
which the disturbances are moving averages of random elements (Phillips
[ 19661 1978). Controlling the economy meant modifying the structure
of the system with the aim of reducing the variance of target variables
(Phillips and Quenouille 1960; Phillips 1968). Phillips-reviving an old
idea of econometrics now known as the Lucas critique-remarked that
this definition of control implied that one could not predict the effects of a
control from an econometric model without first identifying the changes
in the underlying structural model that would be caused by the control.
Phillips used the computer at the National Physical Laboratory at Teddington (a section outside central London) to simulate the time-forms
of lags in the responses of production, given changes in aggregate demand (Phillips 1957; Kendall 1960, 17-20). Phillipss junior colleague
R. G. Lipsey recalls that, of the members of the LSE economics department, No one, except Bill [Phillips] had seen a[n electronic] computer
in 1958. . . . Bill was exceptional in knowing about, let alone using,
computers (letter to the author from R. G. Lipsey, 28 July 1993). Nevertheless, Phillips did his Phillips curve estimates on a Marchant mechanical desk calculator that ran on electrical power. Why did Phillips,
who in 1958 was in a rush to go on sabbatical in Australia, avoid using
an electronic computer to speed his research?
Birkbeck College and University College London (UCL), which like
LSE belonged to the University of London, had large-scale, automatic,
high-speed, general purpose computers endowed by their users with gen-

396 History of Political Economy 28:3 (1996)


ders and names6 Data inputs were punched onto cards using machines
like typewriters and fed into card readers connected to the computer.
There were no terminal hookups, so Phillips or a research assistant would
have had to take the work some two miles up the road to Birkbeck or
UCL.7 The computers, which allowed only one user at a time, were not
in continuous use due to a shortage of operating staff and space and were
down a substantial part of their scheduled computing time (Williams and
Campbell-Kelly 1989, xi, 247,474-75). Those inconveniences were not
surprising given that the stored-program electronic computer emerged
in detailed form in the United States during World War 11, and England
initially lagged behind the United States in computer technology and
usage (Norberg 1992).
Todays automatic computers would find the least-squares solution
given fifty-three observations and two variables in about a minute; the
same problem would take as long as an hour on the mechanical electricalpowered desk calculator if the researcher checked the results. Yet few
statistical programs for use on automatic computers were readily available at that time.* Writing the least-squares program was time consuming, since researchers had to write the program in the machine language
appropriate for their computers after having checked the chain of reasoning on a mechanical electrical-powered desk calculator. And researchers
expected automatic computers to be no more, if not less, reliable than
6. In early 1958, the physics department of University College had an All Purpose Electronic
X-ray APE(X)C Computer. Birkbeck College had the APE(X)C and the British Tabulating Machine HEC computers. In 1960, Phillipss research assistant carried out least-squares estimates
on Joyce May (LSE Library Archives, Collection Miscellaneous 857, section 2/3; letter from
A. Raspin, Archivist of the LSE Library, 25 July 1995).
A drawback tooral history is that historical agents haveconflicting memories. Nancy Wulwick
(1989, 180), citing an anonymous referee, stated that Phillips could have used the University of
London Ferranti mainframe computer. However, R. A. Buckingham, director of the University
of London Computer Unit in the late 1950s recalls that the Ferranti MR I1 Mercury was not
installed in Gordon Square (near Birkbeck College) until the end of 1958 (letter to the author
from R. W. Baker, Director of the University of London Computer Centre, 14 March 1994;
enclosing copy of letter to R. W. Baker from R. A. Buckingham, 1 March 1994).
7. Wulwick (1989, 180), citing an anonymous referee, refers to Phillipss research assistant.
Memories conflict as to whether he had an assistant at the time (letters from D. Laidler, 28 July
1993; and M. Steuer, 21 July 1993).
8. Wulwick (1989, 180), citing an anonymous referee, implies that statistical software programs were available to Phillips. R. A. Buckingham recalls that a statistical program for least
squares was available for use on the Ferranti MR I1 Mercury computer only after Phillips published his curve estimates (copy of letter from R. A. Buckingham to R. W. Baker, 1 March
1994, which R. W. Baker sent to the author).

Wulwick / Two Econometric Replications 397


mechanical desk calculators (Williams and Campbell-Kelly 1989, 199200).9 A major source of computing error was due to round-off error,
which arose because the machines stored numbers composed of a relatively small, fixed number of digits (say only up to ten digits as compared to more than thirty-two today). Round-off error tended to be greater
when researchers wrote a program that solved the normal equations of
least squares by the Doolittle method or some other popular elimination
method of inverting matrices. lo Rounding errors at the initial stages of the
elimination method pyramided and amplified through subsequent stages
of the method (Longley 1967; Goldstine and von Neumann 1963,14). At
least the mechanical desk calculator permitted the meticulous Phillips to
be flexible about the number of significant digits.
As an engineer, a control theorist, and a time-series expert, Phillips
was imbued with the culture of applied science (Montgomery and Becklund 1938, 124-25, 156). That professional culture was governed by
an ideology that fostered universalism, objectivity, accountability, and
procedures for communication (Mulkay 1991, 62-78). Good applied
science was supposed to involve careful, detailed technical statements
of the problem at hand and the means to solve it. No wonder then that
Phillips (1958a) reported exactly how he constructed his curve.
Phillips constructed time series to represent annual rates of moneywage inflation and unemployment for the United Kingdom for 18611957 (appendix 1; figures 1-3b). He fit a hyperbolic curve to the scatter
diagram of money-wage inflation and unemployment for 1861-1913 by
means of the time-honored method of regression and then superimposed
the curve fitted to the 1861-1913 data to the scatter diagrams for 1913-48
and 1948-57. The 1861-1913 period, which contained 6.5 trade cycles
(figures 4-10), confirmed Phillipss preconception of a negative relation
between inflation and unemployment (Wulwick 1989, 174-80).
Phillips noticed that the residual variation of the trade-cycle data from
the fitted hyperbolic curve varied inversely with the change of unemployment, forming counterclockwise loops about the curve. To reflect
9. Rumor has it that it is impossible to replicate the econometric results done in the 1950s
by economists in Manchester working on one of the first British stored-program automatic
electronic computers (letter from D. Laidler to the author, 28 July 1993).
10, Given the model Y = b?
e, one found the solution 6 of the s,et of normal equations
X X b = X Y . One solved for b by finding the inverse of X X , that is, b = ( X X ) - X Y . The
Doolittle method is an abbreviated way of arriving at the same end product (Graybill 1961,
149-52; National Physical Laboratory 1961.7).

398 History of Political Economy 28:3 (1996)

10

$1

0
X

10

II

Figure 1 Phillipss figure 1, 1861-1931. Mean coordinates: (1.52,


5.06), (2.35, 1.55), (3.48, 0.85), (4.49, 0.35), (5.95, -0.18), (8.37,
-0.35).
32
24
16
8

* o
-8
-16

-24
-32 r
0

21

10

12

14

16

18

20

22

Figure 2 Phillipss figure 9, 1 9 1 3 4 8 .

Wulwick / Two Econometric Replications 399

12

11
10
fitted 10 1861-1913 data

-Curve

9
8

7
6
5
4

I
0 ,

Figure 3a Phillipss figure 1 1, seven-month lead in unemployment,


1948-57.

12
11
x 51

10

fitted to 1861-1913 data

-Curve
9
8

I
6
5
4

3
2

0 ,

Figure 3b Phillipss figure 10, 1948-57.

400 History of Political Economy 28:3 (1996)

10

-Curve

fitted lo 1861-1913 data

r
2

0
68

-2
-4

61

10

11

Figure 4 Phillipss figure 2, 1861-68.

10

11

Figure 5 Phillipss figure 3, 1868-79.

12

Wulwick / Two Econometric Replications

401

10
8

6
4

r
2
83
8

86

0
19

-2
-4
0I

10

II

12

Figure 6 Part of Phillipss figure 4, 1879-86.

-Curve

fitted to 1861-1913 data

- 86
92

93

10

11

Figure 7 Phillipss figure 5, 1886-93.

402

History of Political Economy 28:3 (1996)

10

8
6

4
$I

0
03

-2

-4

10

11

Figure 8 Phillipss figure 6, 1893-1904.

Figure 9 Phillipss figure 7, 1904-9.

Wulwick / Two Econometric Replications 403

+Curve fitted

I86 1- 19 13 data

10

10

11

Figure 10 Phillips's figure 8, 1909- 13.


the effects of the level and the change of unemployment on money-wage
inflation, Phillips suggested a model with which engineers are familiar,
the generalized hyperbola, I
y

+ a = bxC+ k (l/x'")

a,b,m>O

(dxldt)

+ el

(1)

k,ccO

(Phillips 1958a, 291 ;Gilbert 1976; Lipka 1918, viii). The simple form of
equation (1) was consistent with Phillips's interpretation of wage inflation as mainly the outcome of the competitive bidding of labor (Phillips
1958a, 284, 298; Desai 1984, 255-57). Unemployment rather than inflation figured as the right-hand-side variable since Phillips viewed unemployment as a proxy for aggregate demand, which could be stabilized
by monetary policy (Phillips 1954, 315; 1958a, 299; Wulwick 1989,
185-86).
The computing programs available in the 1950s could not solve most
nonlinear problems (Goldstine and von Neumann 1963,2). No computing programs existed that could use the least-squares criterion to search
for the unknown parameters of an equation like (l), which cannot be
1 1 . Equation ( 1 ) can be written as the generalized hyperbola y
( d x l d t ) ] ,a = -c

(k/xm-)

+a

= (I/xa)[b

404

History of Political Economy 28:3 (1996)

linearized in terms of logarithms. That technical problem led Phillips


to improvise by omitting the variable ( k / x " ) ( d x l d t ) , which left the
equation in loglinear form

+ a ) = log(b) + c log(x) + e2
a,b>O
e2

= el

c t O

+ (k/x") (dxldt).

Phillips estimated equation (2).


Phillips, the time-series expert, offered three justifications for omitting
the term ( k l x " ) ( d x l d t ) from the estimating equation.
The Negligible Bias in the Estimate of a
The expected estimate of b in equation (2), assuming equation (1) to be
the true equation, is
E ( 6 ) = b + k cov [ x c , (l/x") ( d x l d t ) ] / var(xC).

The estimate of b would be biased if the covariance and, therefore, the


correlation r [ x c ,(1/ x m ) ( d x l d t ) ] were nonzero.'* Phillips claimed that
"it could easily be shown that (l/x") ( d x l d t ) is uncorrelated with x or
any power of x provided that x is, as in this case, a trend-free variable"
(Phillips 1958, 290). Indeed, by plotting x , Phillips could have shown
easily with his data that unemployment lacked a time trend; Phillips
even may have estimated the correlation r ( x , d x l d t ) , which comes to
only 0.002.13 It would have been difficult to prove mathematically that
( l/xm)( d x l d t ) is uncorrelated with any power c of x , but Phillips could
have known from his experience of dealing with data or could have
ascertained with the data at hand that the expression (l/x") ( d x l d t )
and x c are virtually uncorrelated, given arbitrary values of c and m (see
table 9). Thus with good reason, Phillips could have tolerated the omitted
variable bias in the estimate of 6.
Reducing the Bias in the Estimate of a
There remained the possibility of bias in the estimate of a due to the
presence of the additive error term, e2, in equation (2) (Gilbert 1976,

12. E ( 6 ) = b C C O V [ X C , l / x m ( d x / d t ) ] .
13. r ( x , d x / d r ) = cov [ x ,( d x l d r ) ]

/mJvar(dxldt). If r = 0, then cov 1. . .] = 0.

Wulwick / Two Econometric Replications 405

:r
2

10

8
6

>
2

I1

a
-2

-4

10

x
Figure 11 Averages superimposed upon the 6.5 business cycles,
1861-1913. Mean coordinates: (1.52,5.06), ( 2 . 3 5 , l . 55), (3.48,O. 85),
(4.49,O. 35), (5.95, -0. 18), (8.37, -0.35).

52-53). Phillips averaged his data to reduce the omitted variable bias,
explaining that since each interval [of my figure 113 includes years in
which unemployment was increasing and years in which it was decreasing the effect of changing unemployment on the rate of change of wage
rates tends to be cancelled out by . . . averaging, so that each cross
gives an approximation to the rate of change of wages which would be
associated with the indicated level of unemployment if unemployment
were held constant at that level (Phillips 1958a, 290-91). Accordingly,
equation (2) estimated the relation holding between y and x when the
omitted variable d x / d t x O.I4

The Imprecision of k
Phillips observed from the graphs of five of the complete business cycles
(figures 4-5,7-10) that there is a close relation between the deviations of
14. H. Brauchli (1972) and M. Desai (1975,9-10), as well as A. C. Chiang (1984,493-94),
present thc formal basis for the argument.

406 History of Political Economy 28:3 (1996)


the points from the fitted curve [or yi - j ] and the first central differences
of the employment figures [dx/dt], though the magnitude of the relation
does not seem to have remained constant over the whole period (1958a,
291 n. 1). Given his experienced eye for data patterns, Phillips suspected
the numerical estimate of the negative relation between the observed rate
of inflation and unemployment would be imprecise. Hence Phillips had
a third reason that justified estimating equation (2).
An economist in the 1950s who relied upon a mechanical desk calculator and, like Phillips, was faced with fifty-three x , y observations
would have been prone to group and average the data in order to reduce
the number of computations used to solve the normal equations of least
squares. G. Routh, an economist at the National Institute of Social and
Economic Research, used the method of averages in his replication of
the Phillips curve for 1861-1 9 13 given alternative data transformations
(Routh 1959). The method of averaging also had a theoretical rationale,
since the least-squares line shows the conditional mean of y given x ,
E ( y I x ) (Pearson [ 19051 1956,483-85; Stigler 1986). Moreover, Phillips,
as a trained engineer, was familiar with data averaging as a tool to filter
out stochastic disturbances (Phillips and Quenouille 1960,335-37). Extemporizing, Phillips used averaging to help find the estimate of a that
minimized the omitted variable bias (Gilbert 1976,53).
Phillips divided the fifty-three observations into six groups, which
was consistent with traditional practice.I6 He divided the x-axis on the
scatter diagram (figure 11) into six fixed bandwidths b, (z = 1, . . . 6 )
and 7-1 l.I7 The average values
defined by x = 0-2,2-3,3-4,4-5,5-7,
of unemployment X in the bandwidths were defined as X, = C x , / n , and
the average values of money-wage inflation 7 in the vertical arrays by

15. As it turned out, the standard crror of the estimate of k by means of modern nonlinear
least squares is relatively small (table 4, equation Ib).
16. Sturgess rule to determine the number of groups states that when n is the number of
groups and N the number of observations, then 2- = N (Sturges 1926.65). The fifty-three
observations call for seven groups (n = 6.73).
17. Wulwick 1989 states, since Phillips left no papers, we do not know if he tried out
alternative intervals (180). For a long time, researchers understood that Phillips left no papers
(telephone conversations with the author and A. Sleeman, 16 June and 23 October 1995).
According to C. A. Blyth, Phillipss biographer, as far as I can find out his widow has no papers
(letter to the author, 6 October 1986). In 1994, Phillipss widow donated papers to the LSE
archival collection (Collection Miscellaneous, 857). None of the papers in the collection concern
the Phillips curve, except for a large table of data, which does not contain any information about
the choice of intervals.

Wulwick / Two Econometric Replications 407


I

y z = C y , / n , . The least-squares line was computed on the basis of the


averaged data X,,y,,

Phillipss choice of bandwidths preserved the negative sign of the first


derivative across the graph of averages d y l d x < 0. The resulting graph
of averages supported Phillipss hypothesis by conveying the image of
a strong, negative, highly nonlinear relation between the average rate of
money-wage inflation and unemployment.
Statisticians solved the problem of estimating the constant 6 of the generalized hyperbola in various ways (Lipka 1918, 140; Wolfenden 1942,
329). In Phillipss study, the constants b and c were estimated by least
squares using the values of y and x corresponding to the crosses in the
four intervals between 0 and 5 percent unemployment [z = 1 . . .4] the
constant a being chosen by trial and error to make the curve pass as close
as possible to the remaining two crosses in the intervals between 5 and
11 percent unemployment (Phillips 1958a, 290). In light of Phillipss
report, I repeated Phillipss estimates of b, c, and a by means of this
iterative procedure (see table 10):
Round I , Step I

I estimated the constants bl and C I in the equation*

logy, =b1 +cllogT,+e,

a=O

z = 1. . .4

(2b)

for the four crosses of the graph of averages in the northeast quadrant.
The results were bl = 13.08 and t1= -2.35.
Step 2 Given hI and &, I predicted wage inflation for the two crosses
in the southeast quadrant of the graph of averages and found the average
absolute deviation D of the predicted ypzfrom the actual average inflation
- y,1/2 for z = 5,6. For Round 1 , D1 = 0.4.
rate yz,where D =

lrpz

Round 2, Step I

I arbitrarily set 6 = DI = 0.4.

Step 2 With 6 = 0.4, I reestimated b and c of equation (2a) for the


four crosses in the northeast quadrant (z = 1 . . .4). Given the new
estimates 6 2 = 10.46 and t2= - 1.76, I predicted wage inflation for the
two crosses in the southeast quadrant (z = 5 , 6 ) and found the average
18. Desai, who attempted to find 6 , stopped at Round 1 (1975; 1 I ) .

408

History of Political Economy 28:3 (1996)

absolute deviation 0
Round 3.

= I. 21, which is less than D,.


Hence I went on to

Rounds 3, . . . ,n As long as 0 2 . . . decreased in value, I increased


by 0.1. Thus in Round 3, 2i = 0.5; in Round 4, 2i = 0.6; and so on.
The penultimate round yielded 6 = 0.9 as the estimate associated with
the smallest D-value. Setting 6 = 0.9 and estimating Phillips's equation
(table 4, equation 2a) yields estimates that are identical to Phillips's
estimates (Phillips 1958a, 290).
Historians of economics have thought that Phillips could not have
estimated his preferred nonlinear equation ( 1) for technological reasons
(Gilbert 1976; Wulwick 1989). In fact, Phillips had the know-how after
estimating equation (2) to estimate equation (1). Using the estimates of
(l), he could have specified the equation

Next, he could have searched for value of & that permitted equation (la)
to fit the fifty-three observations most closely (see table 11).Phillips, having searched in the range 0 5 h 5 2, would have arrived at least-squares
estimates of his preferred equation (1) (table 4, equation la; figure 12).
The differences between the estimates of Phillips's equation (1) given
the best technique available in 1958 and modern nonlinear least squares
are minor (table 4, equations 1a, 1b). The striking difference is the weeks
that Phillips would have needed to estimate equation (1) compared to the
minutes that it takes contemporary economists.
The technological limits to nonlinear least-squares estimation compelled Phillips to rely heavily on graphical discourse (Phillips 1958a,
287-90). Phillips saw that the Phillips curve for 1861-1913 (table 4,
equation 2a) fit the data of the 1929-37 trade cycle (Phillips 1958a, 295;
figure 2). Modern nonlinear least-squares estimation indicates no relation
between inflation and unemployment for 1929-37 or other periods during the interwar years. l 9 Next, Phillips superimposed the Phillips curve
for 1861-1913 onto the post-World War I1 data that formed a clock19. For the nonlinear least-squares trials for 1929-37. the program did not reach a solution
after 100 iterations with 4 groups of starting parameters: - a : - 1 , 1.0, -0.5; b: 7.2. 13.7;
c: -2, -2, - 1 , -2. A negative linear relation between money wage inflation and unemployment
appears in the data for the mid-1920s to the late 1930s. Phillips's discussion of the interwar
period (1958a, 295) admilscost push factors, which may explain why he did not use the interwar
data points in estimation (letter to the author from C. L. Gilbert, 27 January 1986).

Wulwick / Two Econometric Replications 409

3t

10

11

Figure 12 Phillipss hypothetical estimates of his preferred equation 1


superimposed on his actual equation 2.
wise loop about the curve (figure 3b; table 4, equation 2a). Proposing
that the clockwise loop arose because of a time lag in the response of
money wages to unemployment, Phillips introduced a seven-month lead
in unemployment that eliminated the loop and visibly tightened the fit
of the curve for 1861-1913 to the modern data (figure 3a; appendix 1,
especially table 2). Modern nonlinear least squares indicates no significant difference between the estimated coefficients of the Phillips curve
with and without the seven-month unemployment lead (table 4, equations 2c-d). Nevertheless, the modem nonlinear least-squares estimates
of the Phillips curve for 1861-1913 and 1948-57 show that Phillipss
experience in time-series simulation served him well, with the curve
appearing as stable as he had surmised (table 4, equations 2b, 2d, 2e).20

Lipseys Replication of the Phillips Curve


Phillipss contemporaries objected to the statistical methods of doubleaveraging by which Phillips constructed his curve (Knowles and Winsten
20. The Phillips curve (equation 2) using Phillipss data sources and definitions is stable for
the postwar period up to the early 1970s but is sensitive to slight changes in the sample period.

410 History of Political Economy 28:3 (1996)


1959). They suspected that the Phillips curve relation arose merely as an
artifact of the method of averages. Lipsey (1960) attempted to replicate
the Phillips curve by means of ordinary least squares, which became
the standard method of analysis in economics by 1960. Lipseys claim
to have replicated the Phillips curve by means of a standard technique
convinced many economists to accept the Phillips curve as an empirical
entity.21Economists have referred to Lipseys article in Economicu, a
heavily cited journal, as a seminal [empirical] contribution, a brilliant
piece, and a careful reconsideration, which offers a more useful statistical analysis than the original Phillips paper (Perry 1966, 8; Laidler
and Parkin 1975, 753; Santomero and Seater 1978, 500; Phelps 1968,
681; 1987, 858; Wulwick 1987, 841-42). Lipseys article, in the context of increasingly available electronic computers, inspired a booming
industry in Phillips curve estimation. Between 1965 and 1980, Lipseys
article received over 230 citations, almost five times as many journal citations as G . L. Perrys (1964) comparable article on the Phillips curve for
the United States (Social Science Citation [Cumulative] Index). Many
contemporary economists learned of the Phillips curve from Lipsey s
1960 article, which remained on graduate reading lists for a long time.
Yet, word circulated informally among economists that the information
supplied by Lipsey (1960) about his data and methods was insufficient
for later researchers to be able to repeat or approximate his estimates of
the Phillips curve.22
Why has no economist published a paper about a failed attempt to
repeat Lipseys exercise until now? Detailed checking of an econometric
exercise is expensive and the benefits are highly uncertain (Mayer 1993,
272). Confronting the professionally active Lipsey with the news that
his famous Phillips curve estimates are nonrepeatable is awkward socially. An article in a technical journal saying that Lipseys 1960 study is
nonrepeatable, appearing after citations to that study have ebbed, might
21. Phillips used multiple regression to estimate the relation between money wage inflation
and the unemployment rate for Australia from 1947-58 (Phillips 1959, 6-7; Sleeman 1983,
25-26). Phillips smoothed the data using 4-quarter moving averages.
22. I received the reports of failed attempts to reproduce Lipsey 1960 from C. L. Gilbert at a
conference in 1989 on Appraising Economic Theories (sponsored by the Latsis Foundation,
Capri, 15-18 October), and from M. Desai in his letter to me dated 28 February 1994. Allen
Sleeman at the 1992 annual meetings of the Western Economic Association (San Francisco,
11-14 July) passed me a message (still in my possession) saying, No one has been able to
reproduce Lipsey 1914-17. Sleeman in telephone conversations with me (I6 June, 23 October
1995) confirmed the message.

Wulwick / Two Econometric Replications 41 1


receive few citations (Feigenbaum and Levy 1994). However, it is important to show that seminal findings cannot be repeated if economics is
to maintain its claim to objectivity.
Lipsey (b. 1928) entered LSE as a graduate student in 1953, became an
assistant lecturer of economics in 1955, and obtained his Ph.D. degree in
1957. The graduate students in economics at LSE specialized in one of
several fields, including analytical and descriptive economics (A & D),
the field that Lipsey chose. Lionel Robbins, who was convener of the economics department, headed the A & D section and its series of seminars,
which were important theoretical events for the
Publications by
the faculty associated with the A & D section conveyed the interests of the
Robbins seminars in methodological questions, the descriptive realism of
assumptions, and deductive analyses (Lipsey and Lancaster 1956; Lipsey
1957; Archibald and Lipsey 1958, 1960). Later publications criticized
Robbinss approach to economics. G. C. Archibald, who became an LSE
economics lecturer, intended to show that the Robbins-Samuelson programme of comparative statics, which obtained qualitative predictions
without quantitative information, produced models that were almost
empty (Archibald 1962, 9). The introduction to Lipseys first edition
of his textbook (1963) on positive economics, which stressed the necessity of quantitatively testing theories, was partly in reaction to Robbinss
Austrian deductivism and disparagement of quantitative economics. Indeed, an anti-Robbins movement motivated by what the junior members
of the A & D section perceived in part as technical and methodological
differences between Robbins and themselves was underway by 1957 (De
Marchi 1988). As a forum for the movement, Lipsey with the support
of Archibald initiated an informal staff seminar on Methodology and
Measurement, later adding the term Testing to its title. Lipsey chaired
the M2T seminars until he left LSE in 1963 when the seminar series came
to an end.
Lipsey and Archibald insisted that testable economic hypotheses must
be expressed in statistical terms. However, the LSE economics department, which awarded most of the M2T group their Ph.D. degrees, did
not offer classes in econometrics until 1961 (the statistics department
covered least-squares analysis; Gilbert 1989, 110-1 1). Indeed Lipsey,
like most economists in the United States and the United Kingdom in the
23. The section about the Lipsey-Robbins connection draws from Dc Marchi 1988 and
an excerpt from a letter to Neil De Marchi from David Laidler, 26 November 1985, which
De Marchi showed the author.

412 History of Political Economy 28:3 (1996)


1950s, never received much formal training in econometrics. As Lipsey
recalls, Most of us learned our econometrics from Jack Johnstons text
in the early 1960s which was the first such book accessible to ordinary
economists. . . . I was unusual among my colleagues in the economics
department at LSE in having had two full years of conventional statistics
courses in which we covered the two volumes of Smith and Duncans
[ 19441text which was widely used at the time. This gave me a reasonable
ground in classical statistics but the kind of issues faced in an econometrics text were untouched (letter to the author from R. G. Lipsey, 28 July
1993). The M2Tseminar was a good less attracted to econometrics than
the title of the series suggests (letter to the author from G . C . Archibald,
21 July 1993). The M2T seminars at which Lipsey and M. Steuer presented the results of their econometric research on the Phillips curve
were atypical of the series (Lipsey 1960; Lipsey and Steuer 1961).
The goals of Lipseys 1960 paper were consistent with standard scientific method. Scientists require the guidance of a theoretical framework to permit the interpretation of quantitative observations. So Lipsey,
with the help of Archibald, attempted to construct a framework for the
Phillips curve based on Walrasian principles (Lipsey 1960, 12- 19; Wulwick 1987, 843). Scientists also require that quantitative results be repeatable using acceptable methods of measurement. Lipsey commented
that he was appalled at the [Phillipss] scientific approach, and tried to
refute it, Popperwise (quoted in Blyth 1975,306). In particular, Lipsey
attempted to repeat Phillipss measures of the relation between moneywage inflation and unemployment using standard statistical methods
(Lipsey 1960, 2-3). In addition, Lipseys multiple regression equations
treated money-wage inflation in the familiar manner as the sum of cost
push and demand pull inflation.24
Like Phillips, Lipsey performed the least-squares calculations on the
electrical-powered Marchant mechanical calculator, which limited users
to about two linear multiple regressions a day (letters to the author from
M. Steuer, 21 July 1993; from R. G. Lipsey, 28 July 1993). Economists
who did multiple regressions on such calculators recall the experience
as being tedious. As Archibald commented, One had to find out what a
matrix was, and learn about the inverse, and methods for calculating it
(letter to the author from G. C . Archibald, 21 July 1993). The method of
24. The contrast between the views of inflation held by Phillips and Lipsey may have been
forced upon the two economists by their preferences for contrasting methods of estimation
(letter to the author from C. L. Gilbert, 27 January 1986).

Wulwick / Two Econometric Replications 413


inverting the y matrix using elimination procedures that were especially
adaptable for use on mechanical desk calculators was ironically called
Doolittle (letter to the author from G. C. Archibald, 21 July 1993).
Lipseys estimates of the equations,

and
y =a

+bx- +

-d i

+ej,

(4)

for 1862- 1913 are virtually identical to the authors estimates (table 5 ,
equations 3 4 ) . However, Lipseys estimates for the twentieth century
are not repeatable given the data (shown in appendix 2) that Lipsey said
he used.
For the years 1923-39 and 1948-57, Lipsey estimated the equation

(table 5 , equation 5L). On the basis of his estimates, Lipsey inferred


that, on the average experience of the post-1922 period, other things
being equal, times of falling unemployment were associated with lower
( y s ]than were times of rising unemployment. It would appear then
that Phillipss loops [figures 4-10] have changed directions (Lipsey
196027).
The change in the direction of the loops about the fixed Phillips curve
from counterclockwise to clockwise had various policy implications.
0
Phillips interpreted x as a proxy for inflationary expectations. Clockwise
loops would make expansionary policies look less risky to policy makers who feared inflation (letter to the author from M. C . Lovell, 18January
1994). Lipsey interpreted as a proxy for the regional dispersion of
~ n e m p l o y m e n tWith
. ~ ~ the loops swinging counterclockwise, the upswing was associated with increasing degrees of sectoral inequalities
in unemployment (Lipsey 1960, 27). In that case, regional policy that
decreased inequality in unemployment reduced the national rate of inflation (Wulwick 1983; 1987,848 n. 25). The goals of regional and national
economic policies would conflict in the presence of clockwise loops. The
25. Phillips briefly surmised, The extremely uneven geographical distribution of unemployment may also have been a factor tending to increase the rapidity of wage changes during
the upswing of business activity (1958a. 295). Lipsey then developed the idea (1960, 17-23;
Wulwick 1987, 847-48).

414

History of Political Economy 28:3 (1996)

policy implications help explain the prevalence of the loops about the
fixed Phillips curve as a research topic.
Yet, my estimate of the effect of unemployment changes on wage
inflation was imprecise when based on the data Lipsey said he used
(table 5 , equation 5 ) . W. G. Bowen and R. A. Berry, two of the many
economists with research agendas shaped by Lipseys reported findings,
note that Lipsey reported a squared partial correlation coefficient for
y and i of only 0.3 (Bowen and Berry 1963, 170). I arrived at a
correlation coefficient of 0.02 using Lipseys reported data (table 7)more evidence of the unimportance of unemployment changes as an
influence on wage inflation.
Phillipss archival papers contain an alternative money-wage inflation
series for 1921-57. The series is based on the definition of wage inflation
later used by Lipsey and Steuer (appendix 1, equation [A1.3]; Lipsey and
Steuer 1961, 141). Substituting the alternative wage inflation series in
place of the series that Lipsey (1960) said he used results in a coefficient
on unemployment that is positive and statistically significant (table 6,
equation 5). The estimated squared partial correlation coefficient (ranging between 0.28 and 0.35) is close to Lipseys estimate (table 7).26
Lipsey estimated equation

for the periods 1923-29, 1929-39, and 1948-57 (table 5, equation 6L).
D. J. Smyth, another economist influenced by Lipsey (1960), noted that
Lipsey found the relationship between y and to be positive for 192329, negative for 1929-39, and positive for 1948-57; that is, he found an
anti-clockwise loop for 1929-39 as before World War I, but clockwise
loops for the other two sub-periods, 1923-29 and 1948-57 (Smyth 1979,
230; Lipsey 1960,27). My estimates of d for those years do not support
Lipseys conclusion about the sign for the post-World War I1 period.
Using either Lipseys reported wage-inflation series or the alternative
26. Archibald, who reestimated equation (5) for the 1948-27 time period, remarked that
. . . [XI was not in fact significant
(Archibald 1969, 128). Lipseys estimates of the equation pertained to 1923-39 and 1948-57.
Archibald apparently estimated the equation just for 1948-57. Archibald remarked that I have
absolutely no records of any econometric work aside from what was published . . . I think
everyone, editors included, was very careless about such matters in those days (letters to the
author from G. C. Archibald, 21 July 1993 and 25 April 1994). Archibald thought he made
satisfactory arrangements to preserve the data. Upon returning to England from abroad, he
found that the data were gone.
it seems, however, that his [Lipseys] coefficient for

Wulwick / Two Econometric Replications 415


wage inflation series results in estimates of d of about zero for each
subperiod (table 5 , equation 6; table 6, equation 6). Lipsey did not report
statistical levels of significance, but I assume that he would not have
put forward his argument about the clockwise loops had he found the
estimates of d to be very imprecise for the three subperiods, which is the
case with all my estimates.
Of the estimated coefficients of equation (6), Lipsey reported only
the estimate of d (table 5, equation 6L). Given the information based
only on Lipseys estimates of equation ( 5 ) , B. Hines, K. Cowling, and
D. Metcalf note that the Phillips curve relation appeared to break down
in the post-war period (table 5 , equation 5L; Hines 1964,241; Cowling
and Metcalf 1967, 31). In contrast, my estimates of equation (6) using
Lipseys reported data suggest considerable stability of the Phillips curve
during 1862-57 (table 5, equation 6).
There are three likely reasons why economists have failed to repeat
Lipseys least-squares estimates.
Keypunching and Computational Errors
Researchers sometimes made mistakes punching cards with data that
they did not catch during proofreading. Moreover, Lipsey or a research
assistant probably solved the normal equations of least squares on the
Marchant mechanical electrical-powered desk calculator by an elimination method such as D~olittle.~
Elimination methods of inverting the
matrix to solve the normal equations of least squares presented opportunities for computational mistakes (Graybill 1961, 150-52). Overlooking
mistakes when researchers self-checked their work was a familiar hazard
in the days before full automation.
Truncation and Rounding Error
To save time, Lipsey and his research assistant may have kept a small
number of digits throughout the elimination method. Accumulation of
truncation and rounding errors might affect every digit and even the signs
of the least-squares estimates. Lipsey, who neglected to report the degree
of rounding in the computations, perhaps was unaware of the literature on
27. June Wickens, the wife of A. G. Hines. may have been Lipseys research assistant in
1960 (letter to the author from M. Desai, 28 February 1994). Wickens does not have details on
the Lipsey data (telephone conversation between A. Sleeman and the author, 16 June 1995).

416 History of Political Economy 28:3 (1996)


error-in-estimates due to round-off error (Hotelling 1943; von Neumann
and Goldstine 1947; Turing 1948).
The Wrong Data
We cannot expect Lipsey, who moved to Canada in the late 1960s and
changed institutional affiliation several times, to have kept personal
records of his old data, which could not be conveniently stored on durable
disks as today. Nevertheless, we can show that Lipsey did not use the
data sources and/or the definitions of variables that he reported to use in
his study. Lipseys careless treatment of data seems paradoxical in light
of the attraction of the M2T group to Popper and testing. The scientifically significant physical efect may be defined as that which can be
regularly reproduced by anyone who carries out the appropriate experiment in the way prescribed, Popper explained. No serious physicist
would offer for publication . . . one for whose reproductions he could
give no instructions. The discovery would be only too soon rejected
as chimerical, simply because attempts to test it would lead to negative
results (1 959,4546).
Price Inflation Data
0

Interwar Period Lipsey reported only one source of his p-data for
1862-1957, the 1950 Phelps, Brown, and Hopkins retail price index
(Lipsey 1960, 9). The index ends at 1938; given Lipseys definition of
price inflation as the relative first central difference, that index yields a
time series for price inflation ending with 1938. Yet Lipseys estimates
for the interwar period extended to 1939. Lipsey may have extrapolated
from the Phelps, Brown, and Hopkins data but neglected to report it, or
used an entirely different time series.
Postwar Period Lipseys article did not cite the source of the price inflation data for 1948-57. Lipsey suggested that I refer to the price index
published in the econometric study of the Phillips curve 1870-1958 by
Lipsey and his LSE colleague, M. Steuer (1961, table 7, column 4).28
28. Phone conversation between R. G. Lipsey and the author, week of 5 June 1989. According
to my records, Lipsey offered tocheckon the Phillips data when he went to London in September.

However, I did not hear from Lipsey again on the data problem. Lipsey-Steuer (1961) used the
same data for unemployment 1925-38 as Phillips (Lipsey-Steuer 1961, table 7, column 2).
The wage index 1925-38 in Lipsey-Steuer (given differences in rounding when adjusting for

Wulwick / Two Econometric Replications 417


Lipsey and Steuer cite the Prest price index as the source of their price
index for the postwar period, but the Prest index ends in 1946 (Lipsey
and Steuer 1961, 155 n.C; Prest 1948,58-59).
Money-Wage Inflation Data
In the 1950s and 1960s,journals often published the data used in econometric studies. Phillips, Routh, and Lipsey each published the moneywage inflation data for 1948-57 that they used to estimate the Phillips
curve (Phillips 1958a, 298; Routh 1959,306;Lipsey 1960,30). Rouths
wage inflation data reportedly obtained from Phillips was identical to
Phillipss published data. Table 8 compares Phillipss published data
to Lipseys published data. Phillipss data (column 3) are based, as he
reported, on the money-wage index of the Ministry of Labour Gazette
(column 6) given his definition of money-wage inflation for the modem period as the year-to-year percentage change (as in column 5; appendix 1 , equation [A1.2]). Lipseys data (table 8, column 2) are not
based, as Lipsey reported, on Phillipss money-wage index (column 6)
given Lipseys definition of money-wage inflation as the relative first central difference (as in column 4; appendix 1, equation [A1.1]).The Phillips
archives contain a table of data on which Phillips scribbled a formula (appendix 1, equation [A 1.31)he intended to apply to his money-wage index
(table 8, column 6) in order to obtain an alternative wage-inflation series.
Phillipss handwritten tables of data pertained to the early, exploratory
stage of his research. The tables contain alternative series for inflation and
unemployment as well as variables and a few errors that do not appear in
his 1958 publication (appendix 1, note 5). Applying Phillipss handwritten formula to the wage index (column 6) results in a series (column 2)
that differs from Phillipss handwritten alternative wage-inflation series
(column 1). Presumably Phillips or a research assistant made a mistake
in computing the alternative inflation series. The alternative, erroneous
wage inflation series that appears on Phillipss exploratory data sheets is
identical to the wage inflation series that appears in Lipseys published
replication of the Phillips curve (Lipsey 1960, 30).*
changes in base years) seems to be the wage index that Phillips used (table 7, column 1). The
Lipsey-Steuer unemployment data 1948-57 do not match Phillipss data.
29. This fact is consistent with Lipseys memory of having used data for money-wage inflation that Phillips had and that Lipsey and Steuer (1961) used (telephone conversation with
R. G . Lipsey, week of 5 June 1989).

418

History of Political Economy 28:3 (1996)

Steuer, recalling the statistical practices of his early years as an economist, explained why finding out what data Lipsey used and how it was
constructed is difficult. The problem is that the description of the data
is so vague, the price indices uncertain, lags, etc., . . . I do not for a
moment think anybody cooked the books. What I think happened was that
lots of variations were tried and the most plausible was published without
keeping a good record of how the most plausible was put together (letter
to the author from M. Steuer, 21 July 1993).

Conclusion
Phillips (1958a) fit a nonlinear curve to money-wage inflation and unemployment data for 1861-1913 by means of a time-honored, simple
regression method and superimposed the fitted curve to data for 19141957. I repeated Phillipss estimates of the Phillips curve for 1861-1913
and confirmed the presence of counterclockwise loops around the curve
due to the influence of unemployment changes on wage inflation. Lipsey
(1960) said he applied multiple regression to Phillipss data in order to
replicate Phillipss estimates. No problem arises in repeating Lipseys
replication of Phillipss curve and loops for 1861-1913. But I could not
approximate Lipseys estimates of the Phillips curve for 1914-57 and
arrived at different signs and levels of statistical significance in respect
to the loops.
Three possibilities might explain why I could not repeat the estimates of Lipsey (then a novice at econometrics): computational and keypunching mistakes, accumulating round-off error during subroutines, and
data problems. I found definite evidence of data problems. That I have
applied Phillipss data for 1861-1939 and 1948-57 is clear since my
data sources, scattergraphs, and estimates match those of Phillips. I have
shown that for Lipsey to have obtained the results that he got requires
that he used different data from that which he claimed to have used.
The crux of the repeatability of the Phillips and Lipsey exercises is in
the accuracy of the records that they kept of their work. Phillipss training in electrical engineering probably accustomed him to keep detailed
project reports. As a matter of course, he kept records of each step taken
on the Phillips curve project, as well as steps the project did not but could
have taken. Phillips also was a time-series expert who carefully defined
and constructed his variables from the raw statistics. Lipsey received
training mainly in economic theory at LSE in the 1950s. Self-taught in

Wulwick / Two Econometric Replications 4 19


elementary econometrics, the youthful Lipsey and his peers were unaccustomed to doing empirical research. By their own admission, neither
Lipsey nor his colleagues in the early years of their professional lives
carefully made records of the steps taken and the data used in their
econometric research .30
Let us imagine a counterfactual historical scenario. Say that Lipsey or
someone else around the same time meticulously replicated the Phillips
curve by ordinary least squares. What difference would that have made to
economics? Lipseys study was only one of a multitude of Phillips curve
replications. But it was the first replication by means of ordinary least
squares. The Lipsey replication was timely since its publication occurred
soon after the appearance of Phillipss paper with its eye-catching hyperbola. The replication aroused special interest because the author claimed
to have used Phillipss own data. It was Lipseys replication that clinched
the institutionalization of the Phillips curve. By 1970, that replication received more than three times as many journal citations as Perrys (1964)
replication and ten times as many as W. G. Bowen and R. A. Berrys
( 1963) replication (Social Science Citation [Cumulative] Index).
The research of the community of economists is a cumulative endeavor. Citations suggest that Lipseys 1960 paper had an impact on the
subsequent research of many economists. Economists who knew the estimates of Lipseys equations based on the data he said he used might
well have changed the emphasis, focus, or interpretation of their own
research. There are two major issues that economists with an interest
in the Phillips curve might have handled differently given the revised
estimates of Lipseys equations-the existence of the Phillips curve and
the loops about the fixed curve. My estimates on Lipseys reported data
for the modem period show little evidence of the existence of clockwise
loops or the temporal instability of the Phillips curve coefficients outside
the interwar period.
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articles, . . . searching for the authors data in their stated sources . . , was impossible
(Anderson and Dewald 1994,81).

420 History of Political Economy 28:3 (1996)


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Appendix 1. Phillipss Raw Statistics and Data


The money-wage index and the unemployment data come from the
sources cited by Phillips (1958a, 285, 290-93, 295-96). The series on
money-wage inflation and unemployment for 1861-191 3 are identical
to the data given to me as Phillipss data by C. L. Gilbert, who himself
obtained the data by referring to Phillipss sources and definitions. All
references to the Phillips archives pertain to Phillipss table of data in
section 2/1 of the archives.

Data Sources
Money-Wage Index w
1861-1920: Phelps, Brown, and Hopkins 1950,276,281, table d, column 2 (Phillips 1958,293); identical to the Phillips archives, column (a).
192147 Ministry of Labour Gazette, April 1958, p. 133, index of
hourly wage rates for end December, except for June 1947 (Phillips
1958, 293), differ from the figures in Phillipss ,archives, column (a),
labeled Weekly Wage Index, M.O.L., 2nd December.

Ministry of Labour Gazette, 1950-58, index of weekly rate of


money wages, December (Phillips 1958, 296) is identical to column (a)
of Phillipss archives.
1948-57

Unemployment x
1860-1920 Beveridge 1944, 312-14, table 22, column labeled Employment Rate (T. u.) (Phillips 1958,290,293)is identical to Phillipss
archives, column (d).

Wulwick / Two Econometric Replications 425

1921-39 Ministry of Labour Gazette, January 1940, p. 2, column labeled Percentage unemployed: Great Britain and Northern Ireland
(Phillips 1958, 293) is identical to Phillipss archives, column (d).
194045 Phillips cited the Ministry of Labour Gazette, January 1940
and following (Phillips 1958,293). The Gazette January 1941-February
1949 shows some monthly, quarterly, or annual numbers in categories of
the labor force. The data are sparse, so Phillips would have had to interpolate to arrive at annual data. My source is column (d) in the Phillips
archives labeled MoLG (Quarterly) for 1940-44 and I.L.O. St. Yearbook for 1945.
I94648 Phillips cited the International Labour Office (ILO) Yearbook
of Labour Statistics (Phillips 1958,293). The ILO Yearbooks revise their
data. In the absence of a specific citation, I used the data in Phillipss
archives column (d) for 194647 labeled I.L.O. St. Yearbook. I used
the unemployment figure for 1948 in the Phillipss archives (column [a],
G.B. unlagged), which is close to the figure in the ILO Yearbook
1951.
1949-57 Phillips cited The Ministry of Labour Gazette. He averaged
the monthly percentages for each year and added 0.1 to approximate the
unemployment rate in the United Kingdom (Phillips 1958, 295-96). In
the absence of data for January 1949 in the 1950 Gazette, I referred to
the unemployment rate in Phillipss archives for 1949 (column [a], G.B.
unlagged), which is close to the average of the February-December
1949 rates in the 1950 Gazette. The 1950-57 mean data based on the
Gazettes are identical to the data in the Phillips archive labeled G.B.
Unlagged (except for a difference of 0.01 percentage points at 2 dates).
The data in the archive labeled G.B. Lagged 7 months 1950-57 is
identical to that based on the Gazettes (except for a difference of 0.01
percentage points at one date).
Definitions
Money-Wage Inflation

1861-1920 First, the central difference of the wage index w (as a proxy
for the absolute rate of change of wage rates during a year) is expressed

426 History of Political Economy 28:3 (1 996)


as a percentage of the index number:
y

= est [(dw/dt)(l/w,)J = ( [ w f + l - wf-1]/2w,) 100

(Al.1)

(Phillips 1958, 290, n. 1).


Year-to-year percentage change of the wage index w :

1921-57
y

= est [(dw/dt)(l/w,)J = ( [ w ,- w,-l J / w , - l )

100

(A1.2)

(Phillips 1958, 293). The Phillips archives show an alternative series


defined by

(see note B).


Changes in Unemployment
First, the central difference of the employment figures, the best simple
approximation to the average rate of change of unemployment during a
year, are
dx/dt

= est(du/dt) =

- uf-l]/2)

(A1.4)

(Phillips 1958,291, n. 1).


Seven-Month Lead of Unemployment
Phillips transformed the unemployment data 1948-57, so that the rate
of change of wage rates during each calendar year is related to unemployment [negatively] lagged seven months, i.e., to the average of the
monthly percentages of unemployment from June of the preceding year
to May of that year or

cu

rn +6

(1/12)

rn -6

(Phillips 1958,297).

(A 1.5)

Wulwick / Two Econometric Replications 427

Table 1 Phillips's Data 1860-1947


~~

Money-Wage
Index
1860
1861
1862
1863
1864
1865
1866
1867
1868
1869
1870
1871
1872
1873
1874
1875
1876
1877
1878
1879
1880
1881'
1882'
1883'
1884'
1885'
1886
1887
1888
1889
1890
1891
1892
1893
1894
1895
1896
1897

68
68
68
70
73
75
78
77
75
75
78
80
89
96
I00
100
99
98
95
93
93
93
93
94
94
93
93
93
93
96
100
100
100
99
99
98
99
100

Money-Wage
Inflation

Unemployment

Unemployment
Change

0.0
1.4706
3.57 14
3.4247
3.3333
1.282 1
- 1.948 1
- I .3333
2.0
3.205 1
6.875
8.9888
5.7292
2.0
-0.5
-1.0101
-2.0408
-2.6316
- 1.0753
0.0
0.0
0.5376
0.53 19
-0.53 19
-0.5376
0.0
0.0
1.6129
3.6458
2.0
0.0
-0.5
-0.505 1
-0.505 1
0.0
1.0101
1.5

3.7
6.05
4.7
1.95
1.8
2.65
6.3
6.75
5.95
3.75
1.65
0.95
1.15
1.6
2.2
3.4
4.4
6.25
10.7
5.25
3.55
2.35
2.6
7.15
8.55
9.55
7.15
4.15
2.05
2.1
3.4
6.2
7.7
7.2
6.0
3.35
3.45

2.1
0.5
-2.05
- 1.45
0.35
2.25
2.05
-0.175
- 1.5
-2.15
- 1.4
-0.25
0.325
0.525
0.9
1.1
1.425
3.15
-0.5
-3.575
- 1.45
-0.475
2.4
2.975
1.2
-0.7
-2.7
-2.55
- 1.025
0.675
2.05
2.15
0.5
-0.85
- 1.925
- 1.275
-0.2

428 History of Political Economy 28:3 (1996)

Table 1 (continued)

1898
1899
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921*
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
19343
1935

Money-Wage
Index

Money-Wage
Inflation

Unemployment

Unemployment
Change

102.0
104.0
108.0
107.0
107.0
106.0
105.0
105.0
107.0
107.0
107.0
107.0
107.0
108.0
11 1.0
115.0
115.0
124.02
135.29
160.1
205.2
268.33
35 8.5 31155.5
286.371121
99.5
98.0
101.0
101.5
100.5
99.0
98.0
98.0
97.5
95 .O
93.5
93.5
90.0
91.5

1.9608
2.8846
1.3889
-0.4673
-0.4673
-0.9434
-0.4762
0.9524
0.9346
0.0
0.0
0.0
0.4673
1.85 19
3.1532
1.739 1
3.9 130
8.1818
13.3333
2 1.8332
26.3736
28.57 14
2.5 157
-22.1865
- 17.7686
- 1.5075
3.06 12
0.495 1
-0.9852
- 1.4925
- 1.0101
0.0
-0.5 102
-2.5641
- 1.5789
0.0
-3.7433
1.6667

2.95
2.05
2.45
3.35
4.2
5 .O
6.4
5.25
3.7
3.95
8.65
8.7
5.1
3.05
3.15
2.1
3.25

-0.7
-0.25
0.65
0.875
0.825

'

.o

0.45
0.6
0.7
2.5
2.55
17.0
14.3
11.7
10.3
11.3
12.5
9.7
10.8
10.4
16.1
21.3
22.1
19.9
16.7
15.5

1.1

0.125
-1.35
-0.65
2.475
2.375
- 1.775
-2.825
-0.975
-0.475

0.05

Wulwick / Two Econometric Replications 429

Table 1 (continued)
Money-Wage
Index

1936
1937
1938
1939
I940
1941
1942
1943
1944
1945
1946
1947

94.0
98.5
99.5
104.0
116.0
126.5
134.0
140.0
146.0
153.5
169.5
176.5/103.0

Money-Wage
Inflation

2.7322
4.7872
1.0152
4.5226
1 1.5385
9.05 17
5.9289
4.4776
4.2857
5.137
10.4235
9.3215

Unemployment

Unemployment
Change

13.1
10.8
12.9
10.5
6.83
2.925
1.025
0.675
0.6
1.2
2.5
3.2

1. Phillipss figure 4a was based on Bowleys wage data. Bowleys indices w for 1880-87
were 72, 72, 75, 75, 75, 73, 72, 73 (1914 = 100)-implying inflation rates y of 2.0833, 2.0,
0.0, - 1.333, -2.0548 (Phillips 1958,291, n. 3; Bowley 1937,30; Phillips Archives). Phillips
did not use the Bowley data when estimating the Phillips curve 1861-1913 (Wulwick 1989,
176-79; 1994,8687).
2. There is an alternative money-wage inflation series for 1921-57 in the archives (column
labeled y%) that is identical to the series arrived at by applying equation (A1.3) to the
money-wage index, except for 1934 and 1947-57 (see table 8). The y-series for 1921-39 is:
-24.95, -19. 13, -1.52, 3.015.0.494, -0.99, -1.504, -1.015,0, -0.51, -2.6, -1.59.0,
0.1 1, 1.65, 2.7,4.67, 1.01,4.42.
3. Probably a transcription error accounts for Phillips using the money-wage index for June
instead of December 1934 of 93.5, giving him zero wage inflation for 1934 (Phillips 1958,
figure 9; Phillips Archives, columns [a], [c]).

Table 2 Phillipss Unemployment Data 1948-1 957


No Lead
1948
1949
1950
1951

Seven-month lead2
dxldr

1.79
1.52
1.62
1.31

1.76
1.59
1.62
I .47

-0.16
-0.20
-0.0 1
-0.33

430 History of Political Economy 28:3 (1 996)

Table 2 (continued)

Seven-month lead2
dddt

2.08
1.73
1.43
1.18
1.28
1.56

1.61
2.03
1.61
1.275
1.16
1.48

0.73
-0.28
-0.32
-0.26
0.06
0.28

No Lead
1952
1953
1954
1955
1956
1957
~~

1. The money-wage data for 1948-57 appears in table 8.


2. In the absence of monthly data for 1947-48 in the M.O.L. Gazettes, the
data for the seven-month leads in unemployment and unemployment changes
come from the Phillips Archive (columns [b]-G.B. lagged 7 months and
0
x . . . 7 month lead). The archival papers show that Phillips examined time
series labeled UK lagged 6 months I.L.O. and G.B. lagged 6 months, which
scarcely differ from G.B. lagged 7 months. Comparing Phillipss figure 11 and
my figure 3a, both with unemployment leading inflation, shows that Phillipss
figure indicates the inflation-unemployment data fitting a little more tightly
around the Phillips curve (fitted to the 1861-1913) data) than my figure. The
grapher working on Phillipss article either had imprecise instruments or moved
x leftward in order to give the impression of a tighter fit than the data warranted.

Appendix 2. The Data According to Lipsey 1960


Sources
Unemployment and Money-Wage Inflation (see appendix 1).
Price Index. 1861-1938: Phelps, Brown, and Hopkins (1950,276,28 1)
Table D, column 3. Lipsey (1960, 9, n. 1) cites only the Phelps, Brown,
and Hopkins series that ends in 1938.1948-57: Lipsey and Steuer (1961,
153) table 7, column 4.

Definitions
Price Inflation, Rate of Change of Unemployment, Money-Wage Inflation. 1862-1957. Equation (Al.l), appendix 1 (Lipsey 1960,7, 10).

Wulwick / Two Econometric Replications

Table 3 Lipsey's Data 1861-1914


Price
Index

1861
1862
1863
1864
1865
1866
1867
1868
1869
1870
1871
1872
1873
1874
1875
1876
1877
1878
1879
1880
1881
1882
1883
1884
1885
1886
1887
1888
1889
1890
1891
1892
1893
1894
1895
1896
1897
1898

129
130
133
133
130
131
131
130
128
127
130
138
141
133
128
127
127
120
116
121
119
118
118
112
105
103
101
101
103
103
103
104
103
98
96
96
98
101

Price
Inflation

Unemployment
Change

1.538462
1.12782
- 1.12782
-0.76923 1
0.38 1679
-0.38 1679
- 1.153846
- 1.171875
0.787402
4.230769
3.985507
- 1.773050
-4.8872 I8
-2.34375
-0.39370 1
-2.755905
-4.583333
0.43 1034
1.239669
- 1.260504
-0.423729
-2.542373
-5.80357 1
-4.2857 15
- 1.941748
-0.990099
0.990099
0.970874

8.264461
-43.61703
-74.35897
19.44445
84.90566
32.53968
-2.592596
-25.21008
-57.33333
- 84.84849
-26.3 1579
28.26087
32.8 125
40.90909
32.35294
32.38636
50.39999
-4.672897
-68.09524
-40.84507
-20.2 1277
92.3077
4 1.60839
14.03509
-7.329843
-37.76224
-6 1.44579
-50.0000 1
32.14286
60.29412
34.67742
6.493506
- 1 1.80555
-32.08333
-38.0597
-5.797099
-23.72882

0.0

0.4854 37
0.0
-2.9 12621
-3.571429
- 1.041667
1.041 667
2.55 1020
0.495050

Money-Wage
Inflation'

43 1

432 History of Political Economy 28:3 (1996)

Table 3 (continued)
~~

Price
Index

1899
1900
1901
1902
1903
1904
1905
1906
1907
1908
1909
1910
1911
1912
1913
1914
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1948
1949
1950

99
105
104
104
105
106
106
107
110

107
108
110
112
115
118
115
107
105
107
104
103
98
98
97
93
86
84
83
83
86
88
93
92
94
97.14
100
103.49

Price
Inflation

Unemployment
Change

2.020202
2.380952
-0.480769
0.480769
0.952381
0.47 1698
0.47 1698
1.869159
0.0
-0.934579
1.388889
1.818182
2.232 143
2.608696
0.0

-12.19512
26.53061
26.1 194
19.64286
22.0
1.953125
-25.7 1429
- 17.56757
62.65823
27.45665
-20.40230
-55.39215
-3 1.96721
- 15.07937
2.38095

0.0
-0.467290
- 1.923077
-2.9 12621
-2.55 102
-0.5 10204
-2.57732
-5.913979
-5.232558
- 1.785714
-0.6024 1
1.807229
2.906977
3.977273
2.150538
0.543478
NA
NA

3.174999
6.135857

- 17.09402
- I .94 1746

9.734512
-6.400002

-8.762886
3.24074
25.48077
33.85093
14.08451
-3.167420
- 13.56784
- 13.17365
-1 1.6129
- 17.93893
-0.925929
- 1.162791
-28.90476
-46.92738
-5.592 I04
-6.48 1483

Money-Wage
Inflation

'

0.765306
1.732673
-0.246305
- 1.24378I
- 1.262626
-0.5 10204
-0.255 102
- 1.538462
-2.105263
-0.8021 39
0.278073
1.1 11464
2.186872
3.722984
2.79 19
2.7638 19
7.9400 12
2.803738
3.2 1 1009
7.456 14

Wulwick / Two Econometric Replications 433

Table 3 (continued)

1951
1952
1953
1954
1955
1956
1957
1958

Price
Index

Price
Inflation

112.70
119.60
122.54
126.03
128.25
135.56
140.32
143.51

7.147294
4.113714
2.623633
2.265333
3.715399
4.45 1906
2.832809

Unemployment
Change

17.55725
10.09616
-18.78613
- 19.40560
-6.382978
15.03906
32.69231

Money-Wage
Inflation

7.936508
4.477612
3.623 188
5.555556
7.142858
6.325302
4.2857

1 . Lipsey used the same money wage inflation data as Phillips for 1861-1913.

Appendix 3. Phillipss and Lipsey s Econometric


Estimates
Table 4 Phillipss Estimates Compared to the Authors Estimates
eauation

la
1861-1 9 13

-0.9

1b2

- 1.002

9.638

-1.394

k
-1.317

m
1.1

R2
-

1861- 1913

(0.515)
(0.058)

8.732
(0.747)
(0.0)

-1.292
(0.253)
(0.0)

-2.526
1.187 0.79
(1.15) (0.382) (0.0)
(0.034) (0.003)

1c3
1861-19 13
1948-57

-1.194
(0.621)
(0.059)

10.367
(0.759)
(0.0)

-1.313
(0.26)
(0.0)

-1.214
0.682
0.79
(0.91) (0.543) (0.0)
(0.185) (0.21)

2a4
1861-1913
z = 1..4
0<
<5

-0.9

9.638

-1.394

2b5
1861-1913

-0.883
(0.589)
(0.14)

8.939

-1.384

DW
-

1.22

x,

(0.944)
(0.0)

(0.3 18)
(0.0)

0.64
(0.0)

0.78

434 History of Political Economy 28:3 (1996)

Table 4 (continued)
equation

2c3
1948-57

2d6
1948-57
2e3
1861-1913
1948-57

-1.16
(0.677)
(0.092)

R2

DW

0.37
(0.06)

1.55

(0.1)

-1.655
(0.77)
(0.064)

10.192
(3.317)
(0.015)

-1.545
(0.86)
(0.1 1)

0.27
(0.13)

1.47

10.363
(0.842)
(0.0)

-1.328
(0.289)

0.72

1.01

b
10.95
(3.28)

(0.0)

(0.0)

1. All least-squares estimates result from using micro-TSP 7.0h. The first row of bracketted
numbers under the estimated coefficients are standard errors and the second row are levels of
statistical significance. The signs of 2 appear as if a were on the right-hand side of the equations.
Solutions may be sensitive to starting parameter values.
2. In the absence of a special test to see if least-squares estimates in equations ( 1 a) and (1b)
are statistically different, treat the estimates of equation (la) as the null hypothesis. The F-ratio
given the sum of squared residuals from the two equations, five variables and 48 degrees of
freedom is 1S76. The observed significance level of 0.185 supports the hypothesis of a minor
difference between the two estimates (Pindyck and Rubinfeld 1991, 110-1 1).
The estimates of k in Gilbert (1976, tables 1 and A2) and Wulwick (1989, 176, equation 7a)
0
differ from the estimate in equation ( 1 b) because the two earlier studied defined x in terms of
equation A I . 1 instead of A2 (appendix 1 ).
3. With Phillipss seven-month lead in unemployment.
4. The estimates are based on the Woods data without the Bowley substitution (Wulwick 1989,
176-78). Phillips did not use Bowley data in obtaining numerical estimates of the inflationunemployment relation (Wulwick 1994, 87).
5. These estimates of equation (2) are identical to those of Gilbert (1976), who used nonlinear
least squares, and are close to those of Oliver, who used maximum likelihood (Oliver 1986,
223).
6. Without the lead in unemployment. For 1948-57, adding ( x m ) ( d x / d r )or d x / d r as independent variables made all the estimated coefficients in equation (2)-with or without the lead in
x-highly insignificant.
In the absence of a special test to see if the estimates of equation (2) 1948-57 with and
without the lead in unemployment are statistically different, treat the no lead estimates as the
null hypothesis. The F-ratio given the sum of squares residuals from the two equations, two
variables, and eight degrees of freedom is 0.69. The observed significance level of 0.53 supports
the hypothesis of an insignificant statistical difference between the two estimates (Pindyck and
Rubinfeld 1991, 110-1 I ) .

Wulwick / Two Econometric Replications 435

Table 5 Lipseys Least-Squares Estimates Compared to the Authors


Estimates, Given the Definitions of Variables in Lipsey 1960
eauation

3L2
-1.23
1862-1 9 13
33
1862-1913

-1.232
(.463)
(.011)

6
5.996
(2.389)
(.016)

R2

DW

3.05

-.021

0.79

n.a.

3.061
(2.423)
(.213)

-.021
(.004)
(0.0)

0.79
(0.0)

1.15

0.82

n.a.

4L
-0.94
1862-1 9 13

4.92

3.66

-0.016

44
1862-1913

-0.936
(.45)
(.043)

4.916
(2.285)
(0.037

3.673 -0.016
0.198 0.82
(2.292)
(.004) (.074) (0.0)
(.116) (0.0) (0.01)

1.12

5LS
1923-39
1948-57

0.74

0.43
(2.1)
[.84]

11.18
(6)
[.076]

0.038 0.69
(.012) (0.08)
[.005] [O.O]

0.91
(0.0)

1.7

5
1923-38
1949-57

.847
(.289)
(.008)

1.617
(1.572)
(.316)

4.622
(2.82)
(.l 16)

0.008
.618 0.94
(.012) (.078) (0.0)
(.485) (0.0)

1.7

6L
1923-29

n.a.

n.a.

1.91

6L
1929-39

n.a.

n.a.

6L
1948-57

n.a.

n.a.

3.28

0.017 0.742 0.61


(.031) (.349) (0.36)
(.631) (.123)

-6.25

0.2

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

6
1923-29

0.306
7.61 1
(4.803) (5 1.487)
(.953)
(.892)

1.8

6
1929-38

-0.96
29.291
(2.322) 33.273
(.692)
(.402)

-0.003
0.481 0.92
1.64
(.059) (.324) (.001)
(.954) (.188)

66
1949-57

-2.379
7.246
(2.142) (3.095)
(.317)
(.066)

-0.014
0.76
(.021) (.22)
(0.52)
(.02)

0.81 2.1
(0.031

436 History of Political Economy 28:3 (1996)

Table 5 (continued)
equation

DW

8.385
(.742)

-0.0 17

0.81
(0.0)

1.06

(0.004
(0.0)

0.186
(.075)
(.016)

-0.014
(.004)

0.282
(.06)

0.86
(0.0)

1.19

0.93
(0.0)

1.47

R2

66
1862-1 9 13

-1.519
(.268)

(0.0)
6
1862-19 13
1949-57

- 1.496
(.267)

(0.0)
0.627
(.266)
(.023)

6
1923-38
1949-57

(0.0)
8.5
(.684)

3.793
(.878)
(.0003)

(0.0)

(0.0)

(0.0)
-

0.007
(.012)
(35)

0.6
(0.08)
(35)

1. The following are the corresponding equation numbers in Lipsey 1960: 3:7,4:9-10.5: 12-13.
6: 14. Estimates in the table marked L are from Lipsey 1960.
2. All estimates are based on the Woods data without the Bowley substitution (Wulwick 1994,
86-87).
3. My equation (3) estimates are close to Gilberts estimates (Gilbert 1976, table 1: a4).
4. My equation (4) estimates are identical to Sleemans estimates (Sleeman 1983,28). Wulwick
(1994. 87) discusses the effects of including the two unemployment variables.
5. The author found the statistical levels of significance. The range of the Durbin-Watson statistic
corresponds to Lipseys report of no evidence of significant auto-correlation of the residuals
for lags of one . . . period at the 5 per cent probability level (1960, 26).
6. Had Lipsey reported these estimates, an economist in 1960 well trained in econometrics
would have accepted that the coefficient estimates for 1862-1913 fit the 1949-57 data. The null
hypothesis is that the coefficient estimates remain the same. The F-ratio for the variance of 194957 residuals (actual wage inflation less inflation predicted from the 1862-19 13 coefficients)
given four variables and five degrees of freedom is 1.66. The observed level of significance is
0.32.

Table 6 The Authors Estimates Given the Alternative Definition of


Money-Wage Inflation 1921-57 in Phillipss Archival Notes
eauation

5
1923-38
1949-57

0.877
(.467)
(.075)

-0.397
(2.54)
(.877)

6
1923-29

-2.3
(9.97)
(.833)

30.84
(106.89)
(.792)

R2

DW

7.983
(4.551)
(.095)

0.063
(.019)
(.004)

0.704
(.126)
(0.0)

0.87
(0.0)

1.78

0.048

0.5
(.724)
(.539)

0.25
(0.81)

1.8

(.064)
(0.5 1)

Wulwick / Two Econometric Replications 437

Table 6 (continued)
equation

6
1929-38

- 1.82

(3.69)
(0.64)

b
38.51
(52.88)
(.494)

6
1949-57

-4.07
(3.73)
(.326)

9.8
(5.394)
(. 129)

0.038
(0.51)
(0.31)

0.054
(.036)
(.191)

e
0.57
(0.5 1)
(0.3 1)

0.695
(.392)
(.136)

R2
0.81
(0.01)

DW
2.5

0.73
(0.07)

0.88

Table 7 Lipsey's Estimates of Correlations of Variables Compared to


the Author's Estimates
Estimated Squared Partial Correlations'
Author's
Lipsey 's

Y ,x
y , x-'
y , x-4

1923-39/1948-57

1 862- 1913

0.38

0.74

0.47

0.2 1

0.05
0.12

0.001
0.13

0.30

0.28

0.022

0.022

0.28

0.35

0.76

0.13

0.73

0.76

0.55

0.61

y, x

1923-3811 949-57
y-Data of
Table 2A
Table 2B

y, P

Estimated Squared Correlations between Independent Variables


0

-T,P
0

;r,

0.47

0.10

0.48

0.09

0.01

0.05

I. Lipsey 1960, 26. The formula for the squared partial correlation coefficient r 2 given five
variables is r:(3),s42 = Rt,2345 - R:,24s/1 - R;,24s (Croxton and Cowdon 1955,551).
0

2. The estimate of the squared partial correlation coefficient between y and x using the formula
in the textbook from which Lipsey learned statistics is 0.01 (Smith and Duncan 1944,467).

438 History of Political Economy 28:3 (1996)

Table 8 Money-Wage Data

1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958

3.73
1.82
4.4
10.61
5.28
2.9
4.88
6.58
7.31
5.5
-

3.8 1
I .85
4.48
10.0
6.15
2.94
4.26
6.7 1
7.5
5.28
-

3.9
1.9
4.6
10.5
6.4
3.O
4.4
6.9
7.9
5.4
-

2.8037
3.21 10
7.456 1
7.9365
4.4776
3.6232
5.5556
7.1429
6.3253
4.2857

3.8835
1.8692
4.5872
10.5263
6.3492
2.985 1
4.3478
6.9444
7.7922
5.4217

103
107
109
114
126
134
138
144
154
166
175
181

Definitions and Sources:


Column 1. Lipsey 1960, 30, table 2. Identical to Phillips's archive, section 2/1, column-y.
Column 2. Processed by applying equation A1.3 (appendix 1) to Column 6; Column 3. Phillips
1958,298, table 1 ; Column 4 . Processed by applying equation A 1.1 (appendix 1) to column 6.;
Column 5. Processed by applying equation A 1.2 (appendix 1) to column 6; Column 6. Minisrry
of Labour Gazerre (see Sources, appendix 1). Identical to the Phillips archives (section 2/1,
column [a]) and to Lipsey and Steuer ( 1 961, 153. table 7, column 1).
Analysis of Table 8

Range
Mean
Median

1
1.82-10.61

2
1.85-10

5.3

5.3

5.08

4.88

Columns
3
1.9-10.5
5.49
5 .O

2- 1
10.051-10.871
10.004(
I. 161

3- 1
10.081-11. 121
10. 191
I. 181

Appendix 4. Reconstructing the Steps of


Phillips's Estimation Procedure

Table 9 Equation 1 Correlations between uc and ( l l x " ) ( d x l d t )


Parameters
C

1
1
1.39

Correlation
m
0
0
0.19

0.002'
0.0032
0.0032

Wulwick / Two Econometric Replications 439

Table 9 (continued)
Parameters

2
3
10

Correlation

2
3

0.0162
0.0302
0.0272

10

1. Without the variable k, equation (1).


2. With the variable k = 0.03, equation (1).

Table 10 Reconstructing How Phillips Estimated Equation (2)

-2.35

13.08
10.46
10.19
9.99
9.83
9.72
9.64
9.58

- 1.76
- 1.67
- 1.59
- 1.52
- 1.45
- 1.39
- 1.34

0.4
0.2
0.17
0.13
0.09
0.05
0.016
0.01 8

0.0
0.4
0.5

0.6
0.7
0.8
0.9
1

.o

Table 11 Reconstructing How Phillips Could Have Estimated


Equation ( 1 )

R2

.2
.7
.9
1 .O

.306
.329
.376
.385
.387

1.1

.388

1.2
1.3
1.5
2 .o

.387
.385
.378
.330

Estimating m and k
Sum of Squared Residuals

-1

-1

-r

Ifhi = I . l , t h e n i = -1.315.

Standard Error of
Regression

61.37
59.23
55.19
54.36
54.15

1.09
1.07
1.03
1.022
1.020

55.08

1.019

54.15
54.36
55.18
59.12

1.020
1.022
1.03
1.07

-1