Abstract
WHETHER OR NOT a long-run tradeoff exists between unemployment and inflation, there seems to be little politically acceptable opportunity, except in the short run, to buy employment at the cost of inflation. Exponents of the Phillips curve find that it is steep, and accelerationists find that the natural unemployment rate is high. Hall recently estimated that a 5.5 percent aggregate unemployment rate is necessary merely to keep inflation from accelerating. These findings point to a high floor for unemployment, which is resistant to a one-dimensional stabilization policy depending on manipulation of aggregate demand.
Discussants
Dr. Martin Feldstein
President and CEO, National Bureau of Economic Research
