The Phelps Factor

Phelps with the gold, he said.

Phelps might not even make the podium.

Phelps, however, won while Lochte trailed in fourth.

As Phelps streaked home for the win, Friedman believed him to be Lochte, Phelps' compatriot and long term rival at the top of world swimming.

CBC commentator confuses Michael Phelps with Ryan Lochte for whole race

Ryan Lochte is going to beat Michael Phelps in this event!

Wang Shun's two idols are Phelps and Lochte. Phelps has obtained his 4th gold medals in Rio while Lochte, due to his poor performance, has ended in ranking fifth.

In the immediate moments after Phelps touched for gold, CBC's broadcast fell silent.

Phelps, meanwhile, broke a 2,168 year old record for the most all time individual Olympic titles with the victory.

An Olympics commentator working for Canadian broadcaster CBC suffered embarrassment on Thursday night when he confused Michael Phelps for rival Ryan Lochte.

Bummed out fans on social media noted that Michael Phelps now has as many medals 26 as India has won in its history.

It is to Phelps that we owe the theory of the natural unemployment rate a cornerstone of modern macroeconomic theory and economic policy that Milton Friedman rediscovered a year later, albeit heuristically. Phelps was also responsible for the island parable, which helped explain why monetary policy can have temporary real effects as a result of imperfect information.

Elliotte Friedman mixed the pair up for the duration of the 200m individual medley final, which Phelps won to claim his 22nd Olympic gold medal.

The achievement puts her in the same league as once in a generation athletes like Michael Phelps who have taken their sports to new heights

Did you see him on 60 Minutes, racing Michael Phelps in a pool nothing but swim trunks on diving in the water, determined to beat this swimming champion?

So it is easy to understand why Phelps still leads the way. Indeed, we can expect his new theoretical framework to become a reference point in a decade or two.

When recommending an Indian mathematician to a Harvard colleague, Ludwig Wittgenstein wrote that scientific geniuses generally have one great idea in their life he has had two. What could we say about Phelps?

The award was long overdue. While the Nobel Prize committee cited his contributions to macroeconomics, Phelps has made contributions in many areas, including the theory of growth and technological change, optimal taxation, and social justice.

Chinese influence is increasingly with each passing day, exemplified by the greeting with Chinese Ni Hao (hello) that was popular during the London Olympic Games and cupping therapy endorsed by Michael Phelps during the Rio Olympics.

I didn't hear the news because I was watching the Olympics and how Michael Phelps won two more medals, said Rafael Deyan, a 36 year old office clerk taking a break in Altamira Square on Wednesday.

With Ph.D. in hand, Phelps spent a year at the Rand Corporation in Los Angeles before returning to Yale. He spent another year at MIT, where he taught with Robert Solow and met Samuelson and Franco Modigliani.

But the NAIRU is not immutable. The correct implication, which Phelps repeatedly emphasized, is that governments can implement a variety of policies, particularly structural policies, to allow the economy to operate at a lower level of unemployment.

After a brilliant secondary education, Phelps entered Amherst College in Massachusetts without any specific idea about which discipline to embrace or which career to follow. He was passionate about philosophy but, at the insistence of his father, took classes in economics.

Phelps was also 10 to 20 years ahead of the profession when he developed the theories of wage efficiency and inflation targeting, which are now considered to be the state of the art concerning the labour market and monetary management.

As a practical matter, even controlling for expectations (as Phelps work insists that we do), the relationship between unemployment and inflation is highly unstable. It is virtually impossible to discern the relationship from the data except in a few isolated periods.

Later, Phelps developed a long term growth theory based on education and technical advances. However, this contribution was so far ahead of its time that the profession did not discover its importance until a quarter century later, when theorists were developing endogenous growth theories.

According to the social science citations index, he ranks well among the most important economists since Adam Smith. Economists working on the macro economy, its micro foundations, exogenous and endogenous growth theory, the formation of expectations and problems of information and discrimination all refer back to Phelps.

This vindicated criticism by Milton Friedman and Edmund Phelps, among others, who had already begun to argue that the Phillips curve represented merely a short term relationship. If people do not expect inflation, the illusion of increased purchasing power can boost employment and output for a relatively short period.

By this point, Phelps had already acquired an international reputation through his work on the golden rule of capital accumulation (he was 28). This concept now appears in the toolbox of every economist, is taught in all classes on growth, and serves as a reference in all works on the macro economy.

Some policymakers have concluded from Phelps analysis that the unemployment rate cannot be lowered permanently without ever increasing levels of inflation. Thus, monetary authorities should simply focus on price stability by targeting the rate of unemployment at which inflation does not increase, referred to as the non accelerating inflation rate of unemployment (NAIRU).

Phelps work helped us to understand the complexity of the relationship between inflation and unemployment, and the important role that expectations can play in that relationship. But it is a misuse of that analysis to conclude that nothing can be done about unemployment, or that monetary authorities should focus exclusively on inflation.

According to Phelps, Pope Leo XIII advocated a corporatist view in his 1891 encyclical Rerum Novarum, and Pope Pius XI amplified these ideas in his 1931 encyclical Quadragesimo Anno. But, in reading these works, I do not find a clear or persuasive statement of any economic doctrine, except for basic notions of fairness and Christian charity.

Phelps key observation in macroeconomics was that the relationship between inflation and unemployment is affected by expectations, and since expectations themselves are endogenous they change over time so, too, will the relationship between unemployment and inflation. If a government attempts to push the unemployment rate too low, inflation will increase, and so, too, will inflationary expectations.

In his 2013 book Mass Flourishing, Edmund Phelps argues that we need to promote a culture protecting and inspiring individuality, imagination, understanding, and self expression that drives a nation s indigenous innovation. He believes that creativity has been stifled by a public philosophy described as corporatism, and that only through thorough reform of our private institutions, financial and others, can individuality and dynamism be restored.

How one views these risks depends on the costs of undoing mistakes, which in turn depends on other properties of the inflation unemployment relationship that Phelps analysis did not address. The weight of evidence indicates that the cost of undoing the mistake of pushing unemployment down too far is itself very low, at least for countries like the US, where the relationship has been carefully studied.