Two routes back to the old Phillips curve: the amended mainstream model and the conflict augmented alternative


Blanchard recently stated that the old Phillips curve is alive and well. In this paper we argue that there are two routes to this old Phillips curve. The mainstream route assumes demand-pull inflation and full incorporation of inflation expectations into money wages, and amendments to avoid its accelerationist behavior. The alternative nonneoclassical conflict-augmented Phillips curve assumes no labour scarcity, cost-push inflation and that expectations are not always fully passed on to nominal wages. Additionally, this alternative is also more general than the Heterodox-NAIRU models, as it is compatible both with stable and accelerating inflation, depending on the strength of the workers’ bargaining power.

Volume :- No.14 (2020)

Issue No :- 1 (2020)

Pages :- 81-115

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