tag:blogger.com,1999:blog-8702840202604739302.post3499202654354655537..comments2024-03-28T03:38:53.734-07:00Comments on MacroMania: The Phillips Curve in Recession and RecoveryDavid Andolfattohttp://www.blogger.com/profile/12138572028306561024noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-8702840202604739302.post-6573965565251293102019-06-21T16:51:56.103-07:002019-06-21T16:51:56.103-07:00Well, I still think the answer is money-financed f...Well, I still think the answer is money-financed fiscal programs whenever (U3) unemployment goes above 4%. Something about building up the federal debt makes me queasy. Why borrow when you can just print?<br /><br />A holiday on Social Security taxes, financed by printing money which is put into the Social Security fund, strikes me as an eminently sensible policy whenever unemployment tops 4%.<br /><br />A long-term inflation rate around 3% hardly strikes me as a tragedy if the payoff is sustained prosperity. I wonder how many trillions of dollars of economic output have been lost by a fetish for microscopic inflation rates.<br /><br />You know, macroeconomists were not always like this. I can remember a time when an inflation rate under 4% was considered good enough, and even when Milton Friedman argued the central bank was too tight when the CPI was rising at 3%.Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-5036848193124778812019-06-21T13:23:25.779-07:002019-06-21T13:23:25.779-07:00Funny you should ask: https://files.stlouisfed.org...Funny you should ask: https://files.stlouisfed.org/files/htdocs/publications/review/2019/01/14/understanding-lowflation.pdfDavid Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-63816199657694590302019-06-21T12:41:31.080-07:002019-06-21T12:41:31.080-07:00"I don't think it's particularly help..."I don't think it's particularly helpful to say that high unemployment is causing low inflation--the direction of causality may [be] working in the opposite direction (a high demand for money/debt is causing low inflation)."<br /><br />Interesting idea, that "a high demand for money/debt is causing low inflation". Any chance the idea would also work for the 1960s & 70s, when the inflation/unemployment trade-off appeared to be a valid explanation of the Phillips curve?<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.com