on the search theorists' approach to the phillips curve

abstract: the inverse relation between (wage)inflation and the unemployment rate of traditional macroeconomic theory lacks a microeconomic foundation in a neo-classical framework. neoclassical reasoning implies that employment is always at the full employment level and independent of inflation. in part 2 it is shown how search theory offers a derivation of the phillips relation in a neoclassical framework by removing the complete information postulate of walrasian equilibrium theory. part 3 gives an economic rationale for sticky prices in a market economy with incomplete information, whereas part 4 keynes' concept of unvoluntary unemployment is reexamined in the light of search theory. part 5 gives a critical evaluation why the search theorists' derivation of the short-run phillips relation might not be convincing on theoretical grounds.;