July 29, 2015

Storytelling and facts

Comment on Blissex on ‘The F story about the Great Inflation’


You write: “His [Phillips's] original graph was essentially a hunch based on a very small dataset that in some cases there is a tradeoff between labour market pressure and accelerating inflation, ...” This is inaccurate.

(i) “The original Phillips Curve is about the relation of the rate of unemployment and the rate of change of the wage rate. Phillips studied more than a century's worth of data and established the stable inverse relation for the United Kingdom. Phillips's original curve was a remarkable empirical finding.” (2012, Sec. 6)
(ii) It is the bastard Phillips Curve of Samuelson/Solow which initiated the ensuing discussion and it is this dilettante construction that was later found wanting.

If the Phillips Curve debate proves one crucial fact beyond reasonable doubt it is that the representative economist is an utterly confused confuser. This goes down the line from Samuelson/Solow to Friedman, to Wren-Lewis, and finally to Blissex.

Kakarot-Handtke, E. (2012). Keynes’s Employment Function and the Gratuitous Phillips Curve Disaster. SSRN Working Paper Series, 2130421: 1–19. URL

Related 'The end of storytelling'. See also 'Mental messies and loose losers'. For details of the big picture see cross-references Incompetence