AIL Theory and the Ailing Phillips Curve: A Contract Based Approach to Aggregate Supply / Roger E.A. Farmer.

Format:

Book

Author/Creator:

Farmer, Roger E.A.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w3115.

NBER working paper series no. w3115

Language:

English

Subjects (All):

Interest rates.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

AIL Theory and the Ailing Phillips Curve

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1989.

Cambridge, Mass : National Bureau of Economic Research, 1989.

Summary:

This paper presents empirical evidence from U.S. data of a structurally stable aggregate supply relationship between real and nominal rates of interest and the rate of unemployment. The paper reviews theories of contracts that are based on the twin assumptions of asymmetric information and limited collateral and it argues that these theories (referred to as A.I.L. theories) provide a strong theoretical foundation for a contract-based theory of aggregate supply. It is suggested that the original Phillips curve estimates should be reinterpreted in the light of A.I.L. theories which represent alternatives to the Phelps-Friedman interpretation of the Phillips relationship.

Notes:

Print version record

September 1989.