Re: Interest Rates and inflation

["Harry Veeder" <eo200@xxxxxxxxxxxxxxxxxxx>]

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>From: "J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>
>To: "Alan G. Isaac" <aisaac@xxxxxxxxxxxx>
>Subject: Re: Interest Rates and inflation
>Date: Wed, Dec 20, 2000, 6:52 pm
>

>      It should perhaps be noted that the original
>curve that Phillips himself estimated was one
>between the rate of growth of wages and the
>unemployment rate, which he found to be a
>negative relationship.  I stand to be corrected if
>wrong, but it is my understanding that it was Samuelson
>and Solow who took his study and derived from it
>the hypothetical negative relationship between the
>inflation rate and the unemployment rate that they then
>labeled as "the Phillips Curve."
>     The original paper by Phillips is
>A.W. Phillips, "The Relation between Unemployment and
>the Rate of Change of Money Wage Rates in the United
>Kingdom, 1861-1957," Economica, November 1958,
>vol. 25, pp. 283-299.

Whether or not it concerns inflation or the
money wage rate, John O. is saying observed
relations are not necessarily causal
relations.

It should have been titled:
"The Correlation between Unemployment... "

Perhaps the correlation lasted for 100 years
but it is now over due to underlying causal
factors which we don't as yet really understand.

Harry Veeder