![]() Kelton contends that MMT offers a better alternative to the harsh and punitive policies of the Fed. These critics championed the natural rate of unemployment theory as a superior alternative, one that properly accounted for the damaging effects of inflation. ![]() ![]() In other words, there was a clear trade-off between inflation and unemployment.Ĭritics argued that the Phillips curve created an excuse for politicians during the 1960s and 1970s to engage in inflationary policies-if they ever wanted to reduce unemployment (especially right before an election-all they would need to do was boost inflation. The data showed that there was a clear inverse relationship between inflation and unemployment: When inflation was high, unemployment was low, and vice versa. unemployment in the UK for nearly a century between 18. Created by British economist Williams Phillips, the Phillips curve drew on historical analysis that tracked inflation vs. ![]() The natural rate of unemployment replaced an earlier theory known as the Phillips curve. ![]()
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