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Phillips, Alban William Housego (1914-75)

After a number of jobs in electrical engineering, and after serving in the R.A.F. during the Second World War, Phillips began lecturing in economics at the London School of Economics in 1950. From 1958 until 1967 he was Tooke Professor of Economics, Science and Statistics in the University of London. In 1968 he accepted the Chair of Economics at the Australian National University. Professor Phillips published many articles exploring the relationships between the multiplier and accelerator in mathematical models with various time lags, and applied the engineering technique of closed­loop control systems to the analysis of macroeconomic relationships. In an article in Economica in 1958 Professor Phillips set out empirical evidence to support the view that there was a significant relation between the percentage change of money wages and the leve! of unemployment – the lower unemployment, the higher the rate of change of wages. This relationship, which became known as the Phillips curve, has attracted considerable theoretical and empirical analysis. Its main implication is that, since a particular level of unemployment in the economy will imply a particular rate of wage increase, the aims of low unemployment and a low rate of inflation may be inconsistent. The government must then choose between the feasible combinations of unemployment and inflation, as shown by the estimated Phillips curve, e.g. 3 per cent unemployment and no inflation, or 1 1/2 per cent unemployment and 8 per cent inflation, etc. Alternatively, it may attempt to bring about basic changes in the workings of the economy, e.g. a prices and incomes policy, in order to reduce the rate of inflation consistent with low unemployment. However, the relation between unemployment and inflation has not been sufficiently stable in practice to permit exact judgements to be made.

Reference: The Penguin Dictionary of Economics, 3rd edt.