Nope you are misreading the situation. Both graphs show the inflation rate with unemployment rate,
Don’t believe I am, and I wrote the same.
Please read it carefully.
If the charts were of different data axes
Didn’t suggest this either.
The plot on the right states in US, 1970s onward, ie, different points in time.
Sure, inflation rate & unemployment rate changed in the US over time.
Do you know what else changed in the US over time?
Absolutely anything.
Scientific prediction requires control: it cannot make accurate predictions when relevant variables are left uncontrolled.
Take for instance the ideal gas law.
When temperature is constant, we can reasonably predict volume & pressure to vary inversely for ideal gases.
If temperature is at least known, then we can still make a prediction (a function of temperature).
However, if temperature is uncontrolled, no prediction is possible.
Models only fit the conditions they’re designed to model.
As mentioned before, economic models typically expect ceteris paribus (all other relevant variables held constant).
The article you linked states the Phillips curve models economy only in the short-run.
The US economy over a span of years doesn’t satisfy any of those conditions.
Therefore, the model doesn’t apply.
Attempting to refute a model by applying it to situations it doesn’t claim to model is a strawman.
ah there’s your confusion. i am not and no one here is refuting the model. we are criticizing how that simplified model is abused without considering the other variables and applied to policy-making. does that make sense?
i think we agree, if the above reframes the post for you :)
we are criticizing how that simplified model is abused without considering the other variables and applied to policy-making. does that make sense?
That indeed makes more sense: it only fits short-run predictions.
It justifies short-run policies.
Longer term policies need a different justification: you’re definitely right there.
I think economists have a name for mistaking short- & long-run effects (something to do with equilibrium), but the course was too long ago for me to recall.
Don’t believe I am, and I wrote the same. Please read it carefully.
Didn’t suggest this either.
The plot on the right states in US, 1970s onward, ie, different points in time. Sure, inflation rate & unemployment rate changed in the US over time. Do you know what else changed in the US over time? Absolutely anything.
Scientific prediction requires control: it cannot make accurate predictions when relevant variables are left uncontrolled. Take for instance the ideal gas law. When temperature is constant, we can reasonably predict volume & pressure to vary inversely for ideal gases. If temperature is at least known, then we can still make a prediction (a function of temperature). However, if temperature is uncontrolled, no prediction is possible. Models only fit the conditions they’re designed to model.
As mentioned before, economic models typically expect ceteris paribus (all other relevant variables held constant). The article you linked states the Phillips curve models economy only in the short-run. The US economy over a span of years doesn’t satisfy any of those conditions. Therefore, the model doesn’t apply.
Attempting to refute a model by applying it to situations it doesn’t claim to model is a strawman.
ah there’s your confusion. i am not and no one here is refuting the model. we are criticizing how that simplified model is abused without considering the other variables and applied to policy-making. does that make sense?
i think we agree, if the above reframes the post for you :)
That indeed makes more sense: it only fits short-run predictions. It justifies short-run policies.
Longer term policies need a different justification: you’re definitely right there.
I think economists have a name for mistaking short- & long-run effects (something to do with equilibrium), but the course was too long ago for me to recall.