The Challenge in 2000–2009 to Phillips-Curve-Based Accounts of UK Economic Policy: Comment on Cristiano

Abstract

A series of research papers that appeared from 2000 to 2009 made the case that the UK authorities in the 1950s, 1960s, and 1970s eschewed Phillips-curve-based analysis and that, consequently, the UK Great Inflation of the 1970s should not be regarded as resulting from policymakers’ pursuit of a perceived long-run inflation/unemployment trade-off. The position advanced in these 2000−2009 papers was that, instead, UK economic policy until 1979 subscribed to a nonmonetary perspective on inflation. This perspective implied UK authorities’ rejection of Phillips-curve-type trade-off analysis, but it also meant that they misjudged the importance of monetary policy in inflation control, thereby compounding the country's inflation problem. When this series of papers began to appear at the start of the 2000s, the trade-off-centered interpretation of the US Great Inflation was highly prevalent and was also being applied to the UK Great Inflation. By late in the decade, however, the case—as outlined in the 2000−2009 papers—against Phillips-curve-based accounts of historical policy conduct had gained notable acceptance among central bankers and academic researchers who discussed the UK Great Inflation. This article corrects erroneous statements that the challenge to Phillips-curve-based accounts of historical UK policymaker behavior only appeared in research starting in the 2010s.