In 1958 the New Zealand-born economist A.W. Phillips published a paper in *Economica* (the journal of the London School of Economics) titled 'The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957.

' The paper presented a scatter plot of the U.K. unemployment rate against the rate of wage inflation across nearly a century of British data, and the scatter showed a clear inverse relationship — high unemployment coincided with low wage inflation, and vice versa.

The relationship became known as the Phillips curve, and within a few years it was the centerpiece of macroeconomic policy thinking — economists and central bankers spoke as if there was a stable tradeoff between unemployment and inflation that policymakers could exploit. By the late 1970s the simple version of the curve had broken down empirically (the U.S.

experienced stagflation: high unemployment and high inflation simultaneously, a combination the simple Phillips curve said could not happen).