A. William Phillips, 1914-1975

Alban William Housego Phillips (known commonly simply as "A.W." or "Bill" Phillips) is the man whose name is attached the most famous curve in post-war economics - the "Phillips Curve", positing a relationship between inflation rate and the unemployment rate.

The relationship Phillips discovered in his famous 1958 paper was not posited as a theoretical relationship but it was suggestive enough. Phillips's original study outlined the relationship between wage changes and unemployment between 1861 and 1957. His analysis actually dealt with finding cyclical movements in unemployment and wage growth. The 1861-1913 period gave him a counter-clockwise movement around a certain level of wage growth and unemployment, the 1948-1957 period, yielded a clockwise trajectory while the intermediate period (1918-39), had alternating cycles: clockwise, 1918-21; counter-clockwise, 1921-25; clockwise 1926-33; and counter-clockwise 1934-43. Phillips (1958) then fitted a curve through these findings and found that it yielded him the following:

or:

where g_w is the growth of money wages and U_t is the level of unemployment. There is, as Phillips noted, a negative relationship between unemployment and the growth of money wages. Therefore, this generated the general shape of the curve to which his name was lent.

There were several theories-in-waiting. It was Richard Lipsey (1960) who developed Phillips's findings into a broader context, conceiving of wage inflation as a proxy for price inflation and incorporating the demand-pull explanation for the event. Kaldor (1959), on the other hand, opted for a "cost-push" explanation. Paul  Samuelson and Robert Solow (1960) took Lipsey's version and ran to the policy conclusions on output-inflation trade-offs.

Phillips himself seemed little interested in such debates -- perhaps he had led too eventful a life beforehand to find them amusing. The New Zealand-born Phillips had worked in an Australian mine since he was sixteen, where he learnt electrical engineering; emigrating to Britain in 1937, he was soon involved in World War II and was taken prisoner by the Japanese. Released at the war's end, he returned to London and enrolled in the sociology department of the LSE. He soon became involved in economics and his engineering skills were put to use to create the famous "Phillips Machine" - a hydraulic model of the Keynesian economy which he described in his 1950 paper. He soon joined the faculty of statistics at the LSE, and in 1958, Phillips took up the vacant Tooke Professorship at King's College London.  He remained in London  until 1967, when he took up a post at the Australian National University.

Phillips's work in the later part of his career was largely in optimal control theory and time series techniques in their application to econometrics. Phillips's work on moving average models and parameter estimation in stochastic difference equations have only been belatedly recognized -- remarkably enough by the same New Classical scholars which buried his curve!

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