"MIT School" Reformulation of the Phillips Curve

• Paul Samuelson and Robert Solow

• Postulate: Changes in overall prices will closely track changes in money wage rates

  • Put changes in overall prices on Y-axis instead of changes in money wages

  • Phillips Curve (Samuelson-Solow 1960 reformulation)

        | Changes in prices
        |
        |     x
        |      x
        |       x
        |        x
        |         x
        |           x
        |             x
        |                x
        |                   x
        |                       x
        |---------------------------x----------------------------
        |                               x       Unemployment rate
        |