Phillips-Type Approach or Acceleration?
1971, No. 2
THE TWIN PHRASES “FULL EMPLOYMENT” and “reasonable price stability” usually appear at the beginning of any discussion of the goals of stabilization policy, whether it is a President’s economic report, a journalist’s financial column, or an economist’s principles course. Unemployment and inflation are both “bads,” which should be eliminated. Price stability is sufficiently important that if an increase in unemployment is required to eliminate inflation, either that extra unemployment must be tolerated (Nixon-Shultz pre-August-1971 “gradualism”) or the inflation must be suppressed by partial or complete controls (many “Democratic economists” and post-August Nixon).