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F S Brooman, Professor of Economics at The Open University, and Michael Parkin, Professor of Economics at the University of Manchester, present an analysis of the 'Phillips Curve'. This curve, orig...inated by Professor A W Phillips of the London School of Economics, shows an average relationship between annual rates of unemployment and annual rates of wage increase. The programme demonstrates graphically how Phillips derived the curve from the experience of the fifty years preceding the First World War, and then used it successfully to predict the relationship between wage changes and unemployment in the period after the Second World War. The significance of the Phillips curve in pointing towards a diagnosis of demand pull inflation is discussed, as is the possible use of the curve in economic policy-making. The programme then goes on to consider modifications to the Phillips approach to inflation which have been put forward by Phillips himself and by other economists; for instance, whether there has been any systematic shifting of the curve; effects on the inflation rate of variations in the structure of unemployment; cost push explanations of inflation; and the expectations hypothesis.
F S Brooman, Professor of Economics at The Open University, and Michael Parkin, Professor of Economics at the University of Manchester, present an analysis of the 'Phillips Curve'. This curve, orig...inated by Professor A W Phillips of the London School of Economics, shows an average relationship between annual rates of unemployment and annual rates of wage increase. The programme demonstrates graphically how Phillips derived the curve from the experience of the fifty years preceding the First World War, and then used it successfully to predict the relationship between wage changes and unemployment in the period after the Second World War. The significance of the Phillips curve in pointing towards a diagnosis of demand pull inflation is discussed, as is the possible use of the curve in economic policy-making. The programme then goes on to consider modifications to the Phillips approach to inflation which have been put forward by Phillips himself and by other economists; for instance, whether there has been any systematic shifting of the curve; effects on the inflation rate of variations in the structure of unemployment; cost push explanations of inflation; and the expectations hypothesis.
| Module code and title: | D282, National income and economic policy |
|---|---|
| Item code: | D282; 06 |
| First transmission date: | 02-07-1972 |
| Published: | 1972 |
| Rights Statement: | |
| Restrictions on use: | |
| Duration: | 00:22:50 |
| + Show more... | |
| Producer: | Nicholas Gosling |
| Contributors: | F S Brooman; J. Michael Parkin |
| Publisher: | BBC Open University |
| Keyword(s): | Economic policy; Inflation; Macro economics; Unemployment |
| Footage description: | Brooman describes cost inflation and demand inflation in the present British economy. Brooman introduces and describes the Phillips curve. An animated diagram is used to aid the description and explanation. Prof. Parkin shows how the Phillips curve can be used to throw light on the diagnosis of inflation. Brooman adds two further scales to the Phillips Curve to show how the curve can also express the relationship of wage increases to unemployment in terms of prices and aggregate demand. The diagram is animated. Parkin shows how a diagnosis of demand pull inflation is fitted by the Phillips curve but that if prices rose in the way described by the theory of cost push inflation, there would be no relationship of the kind shown by the Phillips curve. Parkin points out how the Phillips curve can be used as a tool for the shaping of economic policy. Parkin, using figures for unemployment and price rises for 1971, shows how these figures do not fit the Phillips curve pattern. Brooman gives one explanation of this using an example from 'Steering the economy' by S. Brittan. An animated diagram is used to clarify the explanation. Brooman's example has shown a systematic shifting out of the Phillips curve for the years 1958-1971. Parkin chooses a historical period (1913 to 1947-8) to see whether such shifting out has occurred previously. The period is examined with the aid of a diagram; the latter is animated. Parkin shows how the Phillips curve is not capable of accounting for the dramatic changes of the period nor even for certain exceptional years in the period on which it was based and in which the relationship it expresses was discovered. Parkin and Brooman advance reasons for the failure of the Phillips curve to account for the recent inflation in Britain. Brooman considers briefly other explanations of inflation coming under the general heading of cost push. Parkin considers the expectations hypothesis which, he argues, is the most powerful attack on the Phillips curve. Credits. |
| Master spool number: | 6HT/70626 |
| Production number: | 00521_2242 |
| Videofinder number: | 140 |
| Available to public: | no |
