Tarantelli on the Phillips curve. Two critiques of the natural rate hypothesis

Tarantelli’s analysis of the Phillips curve offers two fundamental critiques of the Monetarist “natural” rate of unemployment (nru) hypothesis. Developed in collaboration with Franco Modigliani between the late 1960s and early 1970s, Tarantelli’s work pioneered the integration of unemployment hysteresis into macroeconomic theory. In particular, Tarantelli argued that during expansionary phases, the transition of workers from agriculture to industry, facilitating human capital accumulation, shifted the Phillips curve, reducing, in the way, the nru. This perspective restored a proactive role for national governments in managing real output through aggregate demand – a capacity largely dismissed by Monetarist and Rational Expectations frameworks. The aim of this paper is to provide the impact of Tarantelli’s ideas on the modern economic theory and, as it – still now – continues to represent a useful tool to interpret the economy in a different way with respect to orthodox scholars.