John Taylor has an interesting weblog post amongst a bang-up title, "Staggering Neo-Fisherian Ideas in addition to Staggered Contracts." John goes dorsum to a newspaper he wrote inward 1982 for the Jackson Hole conference, on the number of that time, how to lower inflation. He presented simulations of a model amongst staggered wage setting, which I reproduce below.
So equally far dorsum equally 1982, hither is a model inward which lower involvement rates check amongst lower inflation, both inward the curt run in addition to the long run. John's model has coin inward it, thus the mechanics are a pre-announced monetary contraction.
Sargent's famous "Ends of iv big inflations" tells an fifty-fifty to a greater extent than radical story.
On solving the governments' fiscal problems, inflation ends instantly. Sargent in addition to Wallace alas gain non accept involvement charge per unit of measurement data, but from the inflation information it's pretty plausible that involvement rates cruel similar a rock when the financial reforms are implemented. They accept coin stock measures -- in addition to the ends of these inflations did non accept whatsoever monetary tightening at all. Money stock measures all expanded substantially equally inflation ended.
I've been having an interesting dorsum in addition to forth amongst a correspondent virtually Milton Friedman's views. In "Do higher involvement rates heighten or lower inflation?" I quoted Friedman's 1968 address, in addition to said he believed that an involvement charge per unit of measurement peg is unstable. Not thus fast says my correspondent, in addition to passed on a lovely memo written past times Milton Friedman -- meliorate nevertheless i time owned past times Anna Schwartz. (Yes I checked that it's ok to post this)
in addition to afterward
As I read this quote, Friedman emphasizes that lower involvement rates come upward entirely amongst lower inflation inward the long run, thus at that spot is unopen to Fishery theory here. But inward the curt run, if the Fed lowers coin growth, thus involvement rates volition outset ascent but thus spend upward equally inflation declines. So the implied curt run human relationship goes the other way.
As I read it, then, Friedman says it is possible to target involvement rates. But to gain thus requires specially active coin increment policy to offset the instability that would final result from only announcing a fixed involvement rate.
That leads to a real interesting question, how the same involvement charge per unit of measurement path could hold upward supported past times dissimilar coin increment paths.
So equally far dorsum equally 1982, hither is a model inward which lower involvement rates check amongst lower inflation, both inward the curt run in addition to the long run. John's model has coin inward it, thus the mechanics are a pre-announced monetary contraction.
Sargent's famous "Ends of iv big inflations" tells an fifty-fifty to a greater extent than radical story.
On solving the governments' fiscal problems, inflation ends instantly. Sargent in addition to Wallace alas gain non accept involvement charge per unit of measurement data, but from the inflation information it's pretty plausible that involvement rates cruel similar a rock when the financial reforms are implemented. They accept coin stock measures -- in addition to the ends of these inflations did non accept whatsoever monetary tightening at all. Money stock measures all expanded substantially equally inflation ended.
I've been having an interesting dorsum in addition to forth amongst a correspondent virtually Milton Friedman's views. In "Do higher involvement rates heighten or lower inflation?" I quoted Friedman's 1968 address, in addition to said he believed that an involvement charge per unit of measurement peg is unstable. Not thus fast says my correspondent, in addition to passed on a lovely memo written past times Milton Friedman -- meliorate nevertheless i time owned past times Anna Schwartz. (Yes I checked that it's ok to post this)
in addition to afterward
As I read this quote, Friedman emphasizes that lower involvement rates come upward entirely amongst lower inflation inward the long run, thus at that spot is unopen to Fishery theory here. But inward the curt run, if the Fed lowers coin growth, thus involvement rates volition outset ascent but thus spend upward equally inflation declines. So the implied curt run human relationship goes the other way.
As I read it, then, Friedman says it is possible to target involvement rates. But to gain thus requires specially active coin increment policy to offset the instability that would final result from only announcing a fixed involvement rate.
That leads to a real interesting question, how the same involvement charge per unit of measurement path could hold upward supported past times dissimilar coin increment paths.
