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.
2020-05-21 11:30:00 Thursday ET

Most blue-ocean strategists shift fundamental focus from current competitors to alternative non-customers with new market space. W. Chan Kim and Renee Ma
2018-01-15 07:35:00 Monday ET

Treasury Secretary Steven Mnuchin welcomes a weak U.S. dollar amid pervasive fears of an open trade war between America and China. At the World Economic For
2020-05-05 09:31:00 Tuesday 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.
2023-11-28 11:35:00 Tuesday ET

David Colander and Craig Freedman argue that economics went wrong when there was no neoclassical firewall between economic theories and policy reforms. D
2018-12-03 10:40:00 Monday ET

Bank of England publishes its latest insights into the economic impact of Brexit on British real productivity, capital investment, and labor supply as of 20
2017-01-03 03:26:00 Tuesday ET

President-Elect Donald Trump wants Apple and its tech peers to consider better and greater high-tech job creation in America. Apple has asked its primary