Abstract

This article provides information on economist Lucien Albert Hahn's influence on economics, and highlights similarity between Hahn and A.W. Phillips. Hahn's work was, in some important circles, fairly central to what Gottfried Haberler called the last great debate on inflation in the 1950s. The great debate in the 1970s was over the Phillips curve trade-off; in the 1950s, economist Sumner H. Slichter advocated the proposition that creeping inflation could be permanently tolerated. The context was the Delphic Oracular quality of the 1946 U.S. Employment Act, and the apparent incompatibility of the pursuit of full employment with price stability. Hahn was said to believe that reductions in demand that occur as the economy rids itself of maladjustments can lead to disequilibrating declines in income by causing the demand for speculative money balances to increase. He called this a deflationary depression. But the monetarist mechanism is an equilibrating story whereby the macrosystem can only move along an S-shaped trajectory, in inflation-unemployment space. Along the top half of the S, a Keynesian fall in the price of money can be temporary. Along the bottom half of the S, a monetarist rise in the price of money will dissipate itself by inducing self-destructing delusions about inflationary expectations.

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http://doi.org/10.1215/00182702-29-4-635