Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output": First Edition Milton Friedman’s Nobel Lecture; Inscribed by Milton Friedman

  • Inflation and Unemployment: Nobel Prize Lecture.
  • Inflation and Unemployment: Nobel Prize Lecture.

Inflation and Unemployment: Nobel Prize Lecture.


Item Number: 4455

Stockholm, Sweden: Nobel Foundation, 197.

First edition. Octavo, original wrappers. Inscribed by the author, “For Dr. H.W. Schmidt, with my best wishes Milton Friedman Jan 20, 1978.” In fine condition. Housed in a custom half morocco clamshell box. Rare.

When Friedman gave his lecture in 1976, the long-run relationship between inflation and unemployment was still under debate. During the 1960s, most economists believed that a lower average unemployment rate could be sustained if one were just willing to accept a permanently higher (but stable) rate of inflation. Friedman used his Nobel lecture to make two arguments about this inflation-unemployment tradeoff. First, he reviewed the reasons the short-run tradeoff would dissolve in the long run. Expanding nominal demand to lower unemployment would lead to increases in money wages as firms attempt to attract additional workers. Firms would be willing to pay higher money wages if they expected prices for output to be higher in the future due to the expansion. Friedman assumed, however, that workers would initially perceive the rise in money wages to be a rise in real wages. They would do so because their "perception of prices in general" adjusts slowly, so nominal wages would be perceived to be rising faster than prices. In response, the supply of labor would increase, and employment and output would expand. Eventually, workers would recognize that the general level of prices had risen and that their real wages had not actually increased, leading to adjustments that would return the economy to its natural rate of unemployment.

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