Monday, February 3, 2014
Phillips Curve Fallacy
There is a good article in Forbes about the Phillips curve fallacy that most economists seem to operate under.
Phillips studied wages under a gold standard and found that when labor was in tight supply that wages went up. This is just saying that when supply is tight the price goes up. This is basic economics and common sense.
But most modern economists take this study and think that if they print money that employment will go up. This study does not show that at all.