Edmund Phelps

Edmund Phelps is an American economist whose research reshaped theories of employment, inflation, and economic growth. He received the 2006 Nobel Memorial Prize in Economic Sciences.

Phillips curve: A relationship between inflation and unemployment, first observed in historical data and later incorporated into macroeconomic models. Phelps explained why the observed inflation–unemployment tradeoff could not persist unchanged.
Expectations-augmented Phillips curve: A Phillips-curve model in which expected inflation shifts the inflation–unemployment relationship. Phelps’s independent work established expectations as a key determinant of the curve.
Columbia University: A private research university in New York City, founded in 1754. Phelps spent much of his academic career teaching and researching at Columbia.
Structural unemployment: Unemployment arising from mismatches between workers’ skills or locations and available jobs. Phelps analyzed persistent unemployment through labor-market structure and job matching.
Milton Friedman: An American economist known for monetarism and influential work on consumption and monetary policy. Friedman independently developed a closely related expectations-based critique of a permanent Phillips-curve tradeoff.
Natural rate of unemployment: The unemployment rate consistent with stable inflation, given labor-market structures and expectations. Phelps developed the expectations-based account behind this influential concept.
Adaptive expectations: A model in which people revise expectations using past errors and observed outcomes. Phelps used backward-looking expectation formation to analyze inflation and employment dynamics.
James Tobin: An American economist known for work on monetary theory, portfolio choice, and macroeconomics. Tobin supervised Phelps’s doctoral studies at Yale.
Employment subsidies: Public payments or tax reductions intended to encourage employers to hire workers. Phelps advocated wage subsidies as a way to improve employment for disadvantaged workers.
Keynesian economics: An economic tradition emphasizing aggregate demand and the role of policy in stabilizing output and employment. Phelps revised short-run Keynesian analysis by making inflation expectations central to unemployment.

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