The academic community also became involved in the dispute and circulated a pamphlet entitled “The Economists versus the Bank of Canada”.11 A W Phillips had just published his famous paper on unemployment and the growth of money wages in the United Kingdom, and shown how higher (wage) inflation was typically associated with lower rates of unemployment.12 Not surprisingly, Phillips’ work found a receptive audience in Canada, and researchers soon replicated his results with North American data.
For today, probably the most important point to note is that the near-term task of the Chinese authorities is to manage the desired slowing in credit growth and moderation in asset values. Housing prices are falling in many Chinese cities at present. This is not unprecedented – it is the third time in the past decade this has occurred.