The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd


  • John Cornwall
Reference work entry


Until the early 1970s it was widely believed among economists that rates of unemployment and inflation were inversely related. The higher the rates of unemployment and excess capacity, the lower the rates of wage and price inflation. And since low levels of economic activity generated low rates of profit as well as excess capacity, low rates of investment and productivity growth would be associated with low rates of inflation. The downward sloping Phillips curve was meant to capture much of this.

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • John Cornwall
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  1. 1.