The Phillips Curve from the Perspective of the History of Econometrics

This essay examines the history of econometrics through a case study of the Phillips curve, that is, econometric modeling of the trade-off between inflation and unemployment. It focuses on a number of questions: What econometric tools did modelers choose to use in modeling the Phillips curve? How did their choices shape the ways that they obtained, interpreted, and theorized the empirical evidence? How did the concerns and problems they encountered feed back into the development of econometrics? This study reveals that much of the interaction between econometrics and economics involved modelers making certain trade-offs between theory and data, and their different positions generated disputes, factions, and confusion. It also reveals that the history of econometric modeling of the Phillips curve mirrors the evolving process of how the Cowles structural modeling paradigm has become consolidated, challenged, reformed, or abandoned.