Re(2): RE: Wages and Panic Buttons

[Ellen Frank]

lbo-talk at lists.panix.com writes:
>
>	It's important to distinguish between the NAIRU and the old Phillips
>curve. The PC is an old Keynesian idea. Crucial to the NAIRU is the
>"accelerationist hypothesis," as Joe Stiglitz called it in the passage I
>posted yesterday. And as Stiglitz wrote, the empirical evidence on the AH
>is
>"unambiguous": it's wrong. So the NAIRU must be wrong, too.
>
>	Seth

Yes, this is an important distinction.  One which is often not made.  
The NAIRU was a right-wing idea used to attack the Phillip's Curve
literature (which had been associated with liberal-keynesian-full-
employment policies in their Anglo variety).  The idea of the PC was that
reducing inflation could only be achieved by higher unemployment.  Which
led to an obvious policy question -- what's the "cost" of unemployment
versus the "cost" of inflation?   The PC was a static limited concept, but
not without merit.  

				Ellen