Price Stability and the Origins and Early Influence of the Phillips Curve on British Policy Debates

This paper provides a contextual analysis in which Phillips 1958 is seen as part of a wider research effort, aimed at exploring how to reconcile price stability with levels of unemployment that, while low in absolute terms, were higher than those prevailing in Britain in postwar years. Our reconstruction suggests that what really mattered with Phillips 1958 was that it provided a quantitative estimate of the unique level of the unemployment rate which was compatible with price stability. Even though the British Treasury and Phillips's London School of Economics colleague F. Paish conducted independent researches along the same lines, Phillips 1958 met with early opposition from some prominent British policy and academic circles. Parallel to this, our reconstruction invites reconsideration of the role generally attributed to Lipsey 1960 in strengthening the influence of Phillips 1958. By emancipating the Phillips curve from its original context, with its emphasis on price stability, while strengthening arguments against it from cost-push theorists and Cambridge Keynesians in particular, Lipsey 1960 may indeed have limited the initial influence of Phillips 1958 in Britain.