NZ's most famous economist

Given that the other contributors to this blog either have an exam today or are in Hawaii, the responsiblity for today's post rests on my shoulders.

Since I have been in the US, more than one person (i.e. two people) have taken the time to discuss with me the contribution of NZ's most notable economist, Bill Phillips. The Phillips curve holds that there is an inverse relationship between inflation and unemployment, which has admittedly been found not to be the case for significant periods of time in many countries. Allegedly, the relationship between inflation and unemployment in Canada more closely resembles a map of Canada than the Phillips Curve.

Nevertheless, Bin Bernanke and others still consider that the Phillips curve is still useful for policymakers.

I think the debate on the merits of the Phillips curve says something about the relationship between economic theory and empirics. Some empirical studies claim to disprove economic theories, but unlike the natural sciences, economic theory cannot be disproved by the observance of results that are inconsistent with theory. Particualrly in the field of macroeconomics, other factors may be driving particular results and the thoery may be generally valid but not in the presence of the other factors.

I have also found that many web sites refer to NZ's most famous economist as either British or Australian. Britain is in the northern hemisphere, and Australia is a continent that was originally settled by convicts (that is not a slur, but rather a fact). In contrast, New Zealand is a small nation to the east of Australia, and is also referred to as "the shaky isles" (a reference to the geographical outline of the country) or the land of the long whte cloud.