Richard Lipsey and the "Tyranny" of a Unique Labour Market Equilibrium

Author/s Antonella Palumbo
Publishing Year 2024 Issue 2023/2
Language English Pages 25 P. 5-29 File size 117 KB
DOI 10.3280/SPE2023-002001
DOI is like a bar code for intellectual property: to have more infomation click here

Below, you can see the article first page

If you want to buy this article in PDF format, you can do it, following the instructions to buy download credits

Article preview

FrancoAngeli is member of Publishers International Linking Association, Inc (PILA), a not-for-profit association which run the CrossRef service enabling links to and from online scholarly content.

The article discusses Richard Lipsey’s (2000a, 2000b, 2010, 2016) criticism of the uniqueness of the macroeconomic equilibrium at constant inflation postulated by new-classical macroeconomic models. Lipsey’s position is analysed in the light of his early contribution to the debate on the Phillips curve (Lipsey 1960). There, as later, Lipsey’s argument rests on the assumption that the labour market, though characterised by a unique demand-and-supply equilibrium, may persist in disequilibria in the long run. Such proposition is discussed critically. Lipsey’s analysis can be seen as a clear expression of the fundamental theoretical difficulty in reconciling Keynesian macroeconomic analysis with the neoclassical postulates.

Keywords: Richard Lipsey; Phillips curve; labour market; equilibrium and disequilibrium

Jel codes: B22, B31, E12, E24, J20

  1. Archibald G.C. (1969). The Phillips Curve and the Distribution of Unemployment, American Economic Review, 59: 124-134.
  2. Ball L., Mankiw N.G. (2002). The NAIRU in Theory and Practice, Journal of Economic Perspectives, 16(4): 115-136.
  3. Beveridge W. (1936). An Analysis of Unemployment, Economica, 3(12): 357-386.
  4. Blanchard O.J., Summers L.H. (1986). Hysteresis and the European unemployment problem, NBER macroeconomics annual, 1: 15-78.
  5. Blanchard O.J. (2009). The State of Macro, NBER Working Paper 14259. Bronfenbrenner M., Holzman F.D. (1963). Survey of Inflation Theory, American Economic Review, 53(4): 593-661.
  6. Carlin W., Soskice D.W. (1990). Macroeconomics and the Wage Bargain: A Modern Approach to Employment, Inflation, and the Exchange Rate, Oxford University Press.
  7. Clower R.W. (1965). The Keynesian Counter-Revolution: A Theoretical Appraisal. In F.H. Hahn and F. Brechling (eds.). The Theory of Interest Rates, Macmillan.
  8. Corry B., Laidler D. (1967). The Phillips Relation: A Theoretical Explanation, Economica, 34: 189-197.
  9. Cristiano C., Paesani P. (2018). Price Stability and the Origins and Early Influence of the Phillips Curve on British Policy Debates, History of Political Economy, 50(3): 483-509.
  10. Desai M. (1975). The Phillips Curve: A Revisionist Interpretation, Economica, 42: 1-19.
  11. Forder J. (2010). The L-shaped aggregate supply curve and the future of macroeconomics, University of Oxford, Department of Economics Discussion Paper Series, 486. Forder J. (2014). Macroeconomics and the Phillips Curve Myth, Oxford University Press.
  12. Friedman M. (1968). The Role of Monetary Policy, American Economic Review, 58: 1-17.
  13. Friedman M. (1976). Price Theory, Chicago, Aldine.
  14. Hansen B. (1951). A Study in the Theory of Inflation, London, Allen & Unwin. Harcourt G.C. (2000). A Left Keynesian view of the Phillips Curve trade-off. In Leeson (ed., 2000).
  15. Holmes J.M., Smyth D.J. (1970). The Relation between Unemployment and Excess Demand for Labour: An Examination of the Theory of the Phillips Curve, Economica, 37(147): 311-315.
  16. Keynes J.M. (1936). The General Theory of Employment, Interest and Money, London, Macmillan, 1973.
  17. Keynes J.M. (1939). Relative Movements of Real Wages and Output, Economic Journal, 49(193): 34-51
  18. Layard R., Nickell S., Jackman R. (1991). Unemployment: Macroeconomic Performance and the Labour Market, Oxford University Press.
  19. Leeson R. (1994). Some Misunderstandings Concerning the Contributions Made by
  20. A.W.H. Phillips, R.G. Lipsey to the Inflation-Unemployment Literature, History of Economics Review, 22(1): 70-82.
  21. Leeson R. (1997). The Trade-Off Interpretation of Phillips’s Dynamic Stabilization Exercise, Economica, 64(253): 155-171
  22. Leeson R. (ed., 2000). A.W.H. Phillips: Collected Works in Contemporary Perspective, Cambridge: Cambridge University Press.
  23. Leijonhufvud A. (1967). Keynes and the Keynesians: A Suggested Interpretation, American Economic Review, 57(2): 401-410.
  24. Levrero E.S. (2012). Unemployment, wage rates inflexibility and the notion of free competition in the labour market. In Four Lecturers on Wages and the Labour Market. Aracne.
  25. Lipsey R.G. (1960). The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1862-1957: A Further Analysis, Economica, 27: 1-31.
  26. Lipsey R.G. (1974). The Micro Theory of the Phillips Curve Reconsidered: A Reply to Holmes and Smyth, Economica, 41(161): 62-70.
  27. Lipsey R.G. (1978). The Place of the Phillips Curve in Macroeconomic Models. In
  28. A. R. Bergstrom et al. (edited by), Stability and Inflation, 49-76, Wiley.
  29. Lipsey R.G. (2000a). IS-LM, Keynesianism and the New Classicism. In R. E. Backhouse and A. Salanti (eds.), Macroeconomics and the Real World. Volume 2. Keynesian Economics, Unemployment, and Policy. Oxford, Oxford University Press, 57-82 .
  30. Lipsey R.G. (2000b). The famous Phillips Curve article. In Leeson (ed.), A.W.H. Phillips: Collected Works in Contemporary Perspective, Cambridge University Press.
  31. Lipsey R.G. (2000b). The Famous Phillips Curve Article. In Leeson (ed. 2000), 23242.
  32. Lipsey R.G. (2010). The Phillips Curve, in Famous Figures and Diagrams in Economics, edited by M. Blaug and P. Lloyd, Cheltenham: Edward Elgar, 377-392. Lipsey R.G. (2016). The Phillips Curve and an Assumed Unique Macroeconomic Equilibrium in Historical Context, Journal of the History of Economic Thought, 38(4): 415-29.
  33. Lipsey R.G., Scarth W. (2011). The History, Significance and Policy Context of the Phillips Curve. In R. G. Lipsey and W. Scarth (eds.), Inflation and Unemployment: The Evolution of the Phillips Curve. Vol. 1. Cheltenham, Elgar.
  34. Lucas R.E. Jr., Sargent T.J. (1979). After Keynesian Macroeconomics, Federal Reserve Bank of Minneapolis Quarterly Review, 3(2): 1-16.
  35. Phillips A.W. (1954). Stabilisation Policy in a Closed Economy, Economic Journal, 64: 290-323.
  36. Phillips A.W. (1958). The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957, Economica, 25: 283299.
  37. Rothschild K.W. (1971). The Phillips curve and all that, Scottish Journal of Political Economy, 18: 245-280.
  38. Samuelson P.A., Solow R.M. (1960). Analytical Aspects of Anti-Inflation Policy, American Economic Review, 50: 177-194.
  39. Santomero A.M., Seater J.J. (1978). The Inflation-Unemployment Trade-Off: A Critique of the Literature, Journal of Economic Literature, 16: 499-544.
  40. Schwarzer J. (2018). Retrospectives Cost-Push and Demand-Pull Inflation: Milton Friedman and the “Cruel Dilemma”, Journal of Economic Perspectives, 32(1): 195-210
  41. Schwarzer J.A. (2012). A. W. Phillips and His Curve: Stabilisation Policies, Inflation Expectations and the ‘Menu of Choice’, European Journal of the History of Economic Thought 19: 976-1003
  42. Snowdon B., Vane H., Wynarczyk P. (1994), A Modern Guide to Macroeconomics: An Introduction to Competing Schools of Thought, Elgar.
  43. Tobin J. (1972). Inflation and Unemployment, American Economic Review, 62: 118.
  44. Trevithick J.A. (1976). Money Wage Inflexibility and the Keynesian Labour Supply Function, Economic Journal, 86(342): 327-332.

Antonella Palumbo, Richard Lipsey and the "Tyranny" of a Unique Labour Market Equilibrium in "HISTORY OF ECONOMIC THOUGHT AND POLICY" 2/2023, pp 5-29, DOI: 10.3280/SPE2023-002001