In my critical comment on Robert Solow’s slam on Friedman, I pointed out that when I reread Solow’s and Samuelson’s famous 1960 article on the Phillips Curve as a “menu” for policy makers choosing between low unemployment and low inflation, I found it more nuanced than I had remembered from graduate school days in the early 1970s. I wrote:
Solow thought fiscal policy was more potent and, in his classic 1960 article co-authored with Paul Samuelson, argued that the Phillips curve gave policy makers a “menu.” (The Samuelson-Solow article is more nuanced than I remembered. It’s not clear how stable they thought the menu was. What is clear is that they never even hinted that the long-run Phillips curve was vertical.)
I wondered why I had missed that nuance. Maybe it was the oral tradition at UCLA. Oral traditions can be wrong, but they can also be right. It’s possible that some of my professors heard Samuelson and/or Solow making extravagant claims for the Phillips Curve being stable.
It turns out that Samuelson and Solow did make such claims.
In John Kenneth Galbraith: His Life, His Politics, His Economics, Richard Parker quotes Solow:
Here [in the Phillips Curve] was evidence for a strong, and apparently reliable, relation . . . [that] did not appear to be a short-run transient affair as the [pre-Keynesian] macroeconomics of the 19th and early 20th centuries would have suggested . . . It seemed to say quite clearly that the rate of wage inflation–and, probably, therefore the rate of price inflation–was a smooth function of the tightness of the aggregate economy.
Then Parker writes:
Samuelson asked Solow whether he thought the Phillips Curve meant “the economy can move back and forth along a curve like that,” and Solow answered, “‘Yeah, I’m inclined to believe it,’ and Paul said, ‘Me too.'”
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