The Rise and Fall of the Keynesian Consensus

❑The most important Keynesian development during this period was the
incorporation of the Phillips curve into the prevailing macroeconomic model.
❑By the early 1960s the IS–LM model was being used to explain the determination
of output and employment, while the Phillips curve enabled the policy maker to
predict the rate of inflation which would result from different target levels of
unemployment.
❑The simultaneous increase in both unemployment and inflation in the major
industrial economies in the early 1970s led to the fall of Keynesianism and
prepared the way for the monetarist and new classical counter-revolutions.