Showing 1 - 10 of 33
There's a common belief among economists that when there’s slack in the economy — that is, when labor and capital are not fully employed — the economy can expand without an increase in inflation. One measure of the intensity with which labor and capital are used in producing output is the...
Persistent link: https://www.econbiz.de/10004967502
The concept of resource slack is central to understanding the dynamics between employment, output, and inflation. But what amount of slack is consistent with price stability? To answer this question, economists define baseline values for unemployment and output known as the natural rate of...
Persistent link: https://www.econbiz.de/10008862179
Why did inflation increase so dramatically from the 1960s to the 1970s? One possible theory is that once people started believing inflation would rise, the Fed was forced to validate those expectations by increasing the money supply. In "How Inflation Hawks Escape Expectations Traps," Sylvain...
Persistent link: https://www.econbiz.de/10005498350
For most of the 1990s, forecasters have been predicting an upturn in inflation. Yet, over that same period, the United States has experienced stable or declining inflation. Why have forecasts been at odds with reality? And why does it matter? In this article, Dean Croushore considers some...
Persistent link: https://www.econbiz.de/10005498376
Persistent link: https://www.econbiz.de/10004967316
Persistent link: https://www.econbiz.de/10004967321
Persistent link: https://www.econbiz.de/10004967332
Forecasts of inflation affect decision-making in many segments of the economy. But in the early 1980s, economists found that forecasts in surveys taken over the past 20 years systematically underpredicted inflation. As a result, many economists stopped paying attention to forecasts. However,...
Persistent link: https://www.econbiz.de/10004967338
Persistent link: https://www.econbiz.de/10004967344
Keith Sill examines the theory and evidence on the link between fiscal and monetary policy and, thus, between deficits and inflation. Sill concludes that whether deficits lead to inflation depends on the extent to which a country’s monetary policy is independent.
Persistent link: https://www.econbiz.de/10004967425