2019-08-02 17:39:00 Fri ET
federal reserve monetary policy treasury dollar employment inflation interest rate exchange rate macrofinance recession systemic risk economic growth central bank fomc greenback forward guidance euro capital global financial cycle credit cycle yield curve
The Phillips curve becomes the Phillips cloud with no inexorable trade-off between inflation and unemployment. Stanford finance professor John Cochrane disagrees with Harvard macro economist Gregory Mankiw with respect to the mysterious and inexorable trade-off between inflation and unemployment. It is difficult to depict a key downward Phillips curve for the post-war period because there is no conclusive trade-off between inflation and unemployment. This empirical result remains true even when we consider alternative measures of U.S. inflation such as the deflator for personal consumption expenditures (PCE) and core consumer price index (CPI) inflation less food and energy. Furthermore, the empirical result continues to hold in practice when we consider the economic output gap in lieu of the unemployment rate. Cochrane suggests no clear trade-off between inflation and unemployment in the Phillips cloud. In other words, the Phillips curve is too flat to be true.
This analysis poses a conceptual challenge to New Keynesians who seek to attain the Federal Reserve dual mandate of both price stability and maximum sustainable employment. The central bank can constrain money supply growth as a potential source of economic disturbance; yet, the long-term welfare cost of low inflation has no real impact on economic output, employment, and capital investment.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2019-09-07 17:37:00 Saturday ET

Federal Reserve Chair Jerome Powell announces the monetary policy decision to lower the federal funds rate by a quarter point to 2%-2.25%. This interest rat
2018-08-01 11:43:00 Wednesday ET

Apple becomes the first company to hit $1 trillion stock market valuation. The tech titan sells about the same number of smart phones or 41 million iPhones
2019-11-06 12:29:00 Wednesday ET

Our fintech finbuzz analytic report shines fresh light on the fundamental prospects of U.S. tech titans Facebook, Apple, Microsoft, Google, and Amazon (F.A.
2017-10-27 06:35:00 Friday ET

Leon Cooperman, Chairman and CEO of Omega Advisors, points out that the current Trump stock market rally now approaches normalization. The U.S. stock market
2017-11-24 08:41:00 Friday ET

Is Bitcoin a legitimate (crypto)currency or a new bubble waiting to implode? As its prices skyrocket, bankers, pundits, and investors increasingly take side
2019-04-03 11:35:00 Wednesday ET

A Florida fintech group Fidelity Information Services initiates the largest $43 billion acquisition of the e-commerce payments processor Worldpay. Fidelity