Suchergebnisse

Reviews Milton and Rose D. Friedman's, Two Lucky People: Memoirs, University of Chicago Press, Chicago, 1998, $35 (£24.95), ISBN 0‐226‐26414‐9. Focuses on how the memoirs illuminate the main contributions Friedman has made to political economy and the economics literature.

Looks at the relevance to economic systems of force field equilibrium metaphors. Points out that the force field view of physical reality developed in nineteenth century physics does not necessarily involve homeostasis and reversible time paths. Illustrates the properties of force fields with hysteresis, providing a counter example. Discusses precedents for viewing economic systems as having equilibria haunted by hysteresis, and summarizes and illustrates the implications of applying such an analytical framework to economic systems.

AbstractThis article reviews the contributions of Richard Layard, Stephen Nickell and Richard Jackman, The Unemployment Crisis, Oxford U.P., 1994; and Edmund S. Phelps, Structural Slumps: The Modern Equilibrium Theory of Unemployment, Interest and Assets, Harvard U.P. 1994 to the literature on the determinants of the equilibrium rate of unemployment. The key issue is whether the doctrine of monetary neutrality, which is the hallmark of the natural rate of unemployment hypothesis investigated in the two volumes under review, is tenable with regard to equilibrium unemployment. The conclusion is that the influence of actual on equilibrium unemployment violates the neutrality axiom, and that the natural rate is as much an attractee as attractor for actual unemployment.

Considers two main strands of literature. The first deals with the
tension between the falsificationist view of how economic know‐ledge
could or should be acquired, and the view that economics is a separate,
deductive science. The second concerns the metaphors used in economic
analysis, the main contrast being between metaphors which involve
homeostasis and time reversibility, and those that involve hysteresis
and time irreversibility.

Assesses the NAIRU framework for analysing the determinants of
equilibrium unemployment, as expressed in Layard, Nickell and Jackman′s
Unemployment: Macroeconomic Performance and the Labour Market.
It is argued that the NAIRU has produced many useful insights regarding
the effects of socio‐economic factors on wage determination, but has not
produced a plausible account of the determination of equilibrium
unemployment.