testimony
Friedman: there is no permanent trade-off (1968) From Milton Friedman's 1968 AEA presidential address. The most-cited line in the postwar monetarist program, and the public articulation of the natural-rate hypothesis on the eve of the stagflation that would substantiate it.
From the 1968 AEA presidential address, on the natural rate of unemployment.
There is always a temporary trade-off between inflation and unemployment; there is no permanent trade-off. The temporary trade-off comes not from inflation per se, but from unanticipated inflation, which generally means, from a rising rate of inflation.
Friedman delivered this argument at the AEA’s December 1967 meeting; the address was published in the American Economic Review in March 1968 with US unemployment at 3.6 percent. Within three years the Phillips-Curve consensus the address attacked had visibly broken; within five, stagflation had arrived. The line is the public articulation of the natural-rate hypothesis and the substantive heart of the 1968 AEA Moment .
Milton Friedman , 1968. Milton Friedman, 'The Role of Monetary Policy,' American Economic Review 58(1), pp. 1–17, March 1968. . source ↗
Tradition Monetarist Moment Friedman's 1968 AEA Presidential Address Speaks to What causes inflation? Last updated 2026-04-30