Friedman and Lucas on the Phillips Curve: From a Disequilibrium to an Equilibrium Approach

In this paper I compare Friedman's expectations-augmented Phillips Curve model with Lucas' model on expectations and the neutrality of money and claim that they are underpinned by two different equilibrium concepts. Friedman's model is based on the stationary equilibrium conception, typical of the Marshallian research program. In contrast, Lucas' conception of equilibrium is an outgrowth of the Walrasian conception of equilibrium. In particular, I underline that Friedman's model is a disequilibrium model--witnessing to the fact that disequilibria are a standard outcome whenever the Marshallian conception of equilibrium is adopted--whereas, on the contrary, no room exists for disequilibrium in Lucas' model.