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Business
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| Number of pages / Number of words: |
6 / 1443 |
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Friedman’s theoretical critique of the trade off interpretation of the Philips curve, was initially introduced in 1966 in debate with Solow, however was fully developed in 1967-68 by Friedman and Phelps. The existence of a permanent inflation/employment trade off was denied by Friedman, who favoured the hypothesis of a natural rate of unemployment...
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The existence of a permanent inflation/employment trade off was denied by Friedman, who favoured the hypothesis of a natural rate of unemployment. Friedman argued that the Phillips curve should take account of changes in the real wage rate, not changes in the nominal wage rate. In order that the Phillips curve accurately represented this it was augmented with the expected rate of inflation...
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