Edmund S. Phelps and Modern Macroeconomics

It is not easy to summarize Ned Phelps’s monumental contribution to economics. A first impression is likely to be of a vast array of original concepts and models: the “natural rate of unemployment” and the expectations-augmented Phillips curve (1967, 1968, 1971), the “island” parable of search unemployment (1968, 1969, 1970), “incentive/efficiency wages” (1968), optimal inflation targeting over time (1967, 1972, 1978), the consequences of staggered wage-setting for unemployment dynamics (1977, 1979) and for disinflation (1978), the “customer market” model of pricing (1970, 1994), the roles of education and technological diffusion in long-run growth (1966), “golden rules” for investment in physical capital (1961) and in research (1966), dynamic inconsistency in savings behavior (1968), statistical discrimination (1972), and “structuralist” models of endogenous variation in the natural rate of unemployment (1994).