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Estimated Reading Time: 7 minutes
Just twenty years ago, economists and bureaucrats triumphantly proclaimed the apotheosis of macroeconomic stabilization policy. The “Great Moderation” saw a long spell of full employment, income growth, and low and steady inflation. How we long for those days now! While labor markets appear healthy, this could quickly change. Meanwhile, inflation has surged: Consumer prices are up more […]
Estimated Reading Time: 3 minutes
Everything old is new again: Inflation plagues the US economy. The Consumer Price Index is up 7.9 percent from a year ago. The Personal Consumptions Expenditures index is up 6.1 percent from a year ago. We haven’t seen price pressures like these in 40 years. If we want to understand inflation, we need a framework […]
Estimated Reading Time: 6 minutes
Most wealthy countries today have central banks. And most of these central banks operate discretionarily. What this means is that monetary policymakers have significant latitude to determine the course of monetary policy. Although monetary policy is crafted using sophisticated economic tools, ultimately any policy decision in a discretionary regime is a judgment call. Defining monetary […]