Early Fisherism
John Taylor has an interesting weblog postal service amongst a peachy title, "Staggering Neo-Fisherian Ideas too Staggered Contracts." John goes dorsum to a newspaper he wrote inwards 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 inwards which lower involvement rates tally amongst lower inflation, both inwards the curt run too the long run. John's model has coin inwards it, thence 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 too Wallace alas hit non accept involvement charge per unit of measurement data, but from the inflation information it's pretty plausible that involvement rates roughshod similar a rock when the financial reforms are implemented. They accept coin stock measures -- too 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 too forth amongst a correspondent almost Milton Friedman's views. In "Do higher involvement rates heighten or lower inflation?" I quoted Friedman's 1968 address, too said he believed that an involvement charge per unit of measurement peg is unstable. Not thence fast says my correspondent, too passed on a lovely memo written past times Milton Friedman -- improve all the same ane time owned past times Anna Schwartz. (Yes I checked that it's ok to postal service this)
too after
As I read this quote, Friedman emphasizes that lower involvement rates come upward exclusively amongst lower inflation inwards the long run, thence in that place is about Fishery theory here. But inwards the curt run, if the Fed lowers coin growth, thence involvement rates volition start rising but thence turn down 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 hit thence requires peculiarly active coin increase policy to offset the instability that would final result from only announcing a fixed involvement rate.
That leads to a really interesting question, how the same involvement charge per unit of measurement path could live on supported past times dissimilar coin increase paths.
So equally far dorsum equally 1982, hither is a model inwards which lower involvement rates tally amongst lower inflation, both inwards the curt run too the long run. John's model has coin inwards it, thence 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 too Wallace alas hit non accept involvement charge per unit of measurement data, but from the inflation information it's pretty plausible that involvement rates roughshod similar a rock when the financial reforms are implemented. They accept coin stock measures -- too 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 too forth amongst a correspondent almost Milton Friedman's views. In "Do higher involvement rates heighten or lower inflation?" I quoted Friedman's 1968 address, too said he believed that an involvement charge per unit of measurement peg is unstable. Not thence fast says my correspondent, too passed on a lovely memo written past times Milton Friedman -- improve all the same ane time owned past times Anna Schwartz. (Yes I checked that it's ok to postal service this)
too after
As I read this quote, Friedman emphasizes that lower involvement rates come upward exclusively amongst lower inflation inwards the long run, thence in that place is about Fishery theory here. But inwards the curt run, if the Fed lowers coin growth, thence involvement rates volition start rising but thence turn down 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 hit thence requires peculiarly active coin increase policy to offset the instability that would final result from only announcing a fixed involvement rate.
That leads to a really interesting question, how the same involvement charge per unit of measurement path could live on supported past times dissimilar coin increase paths.
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