| How did macroeconomic events vindicate Friedman and Phelps so quickly? |
| The oil-price shock of 1973-4 induced such large changes in expectations and such a breakdown of the inflation-unemployment relationship that the notion of the shifting Phillips curve could no longer be ignored. (It is worth noting here that economists immediately liked the theory developed by Friedman and Phelps, but didn't know just yet how important is was empirically). |