Authors: Assist Prof. Özlen Hiç Birol
The focus of this article is “adaptive expectations” of Milton Friedman and short and long run Phillips Curve of Friedman. In order to analyze these contributions of Friedman better, discussion about Phillips Curve, different views about this issue in various macroeconomic schools and information about the evolution of issue are given. In this sense, apart from Milton Friedman and Monetarists, Phillips Curve was analyzed in a successive order compatible with the history of discussion within Keynes and Keynesian economics, New-Keynesian school and Neo-Classicals which operates with “rational expectations”.
Information about basic macroeconomic systems is found in the books of Hiç (1994), Paya (1997), Ackley (1961) Branson (1979) and their references. Detailed and comprehensive information about Monetarist, Neo-Classical, New-Keynesian and Post-Keynesian schools which were established and improved in modern years - ie. in 1970’s – are presented in the doctorate thesis of Birol (2001) (in the process of being published as book). This article is based on the information conveyed in the mentioned books. Although Phillips Curve was theorized in 1958, discussion about the subject in literature are found in the years following the observations of Milton Friedman (in 1967, 1968).
Keywords: adaptive expectations, phillips curve