In the 1960s, policy based on the simple short-run Phillips
curve worked better than similar attempts in the 1970s because in
the 1960s:
there was little understanding of the role of inflationary expectations on the Phillips curve model. | |
inflationary expectations were falling so that the long run changes did not work as predicted in the 1970s. | |
inflation was relatively constant, and expectations of inflation were also constant. | |
inflation was out of control, but there were poor mechanisms to measure this. |
Get Answers For Free
Most questions answered within 1 hours.