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Okun, Phillips and Our Economy

February 15, 2021
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If you want to be remembered in economics, get yourself a curve. There’s the Lorenz curve, the Laffer curve, the Kuznets curve, and, probably most famous, the Phillips curve. Phillips was A.W. Phillips, an economist from New Zealand who worked in London. In 1958 he drew a curve connecting the dots between inflation and unemployment. When unemployment went down, inflation went up. The Phillips Curve took the economics profession by storm.

Sometimes people like your curve so much, it becomes a law. That’s what happened to Arthur Okun. He drew a curve showing the relationship between growth in gross domestic product adjusted for inflation and changes in the unemployment rate. When “real” GDP grew enough, unemployment went down. 0His colleagues in the Kennedy administration liked it so much they called it “Okun’s Law.”


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