Was Phelps's natural rate of unemployment criticized?
Yes, the concept of the natural rate of unemployment has faced scrutiny. A common critique, especially early on, was that it might legitimize higher levels of unemployment. However, my intention was never to accept unemployment as inevitable, but to understand its underlying causes at a microeconomic level. Later work, particularly on structural slumps, emphasizes that the natural rate is not fixed and can be influenced by the pace of innovation and the dynamism of the economy.
Ask Edmund Phelps the follow-up →