Neo-Fisherism in Turkey
Turkey had very high inflation from the early 1980s until 2002, with the inflation rate sometimes exceeding 100{5e7f07e14add20b2e04f4edb85a447d3cd8121fc27b809645e9fed603c22cc5c} per annum. But, there was a large disinflation, with the inflation rate falling from a peak of 73{5e7f07e14add20b2e04f4edb85a447d3cd8121fc27b809645e9fed603c22cc5c} in 2002 to 7{5e7f07e14add20b2e04f4edb85a447d3cd8121fc27b809645e9fed603c22cc5c} in 2004. Did the central bank engineer a disinflation by keeping the nominal interest rate high? No. Monetary policy acted to reduce short-term nominal interest rates, and the inflation rate fell.
Inflation, Interest Rates, and Neo-Fisherism In Turkey
By: Stephen Williamson – Federal Reserve Bank of St. Louis
Phillips curve in Argentina
During the period of 1992 to 2009 inflation in Argentina was for the most part less than 10{5e7f07e14add20b2e04f4edb85a447d3cd8121fc27b809645e9fed603c22cc5c}. But since 2010 the Central Bank of the Argentine Republic (BCRA) has tolerated double digit inflation and currently inflation is running near 25 percent. This run of inflation has been above the central bank’s inflation target of 8-12 percent so the BCRA conveniently changed its inflation target this year to 15 percent. How does the Phillips curve of Argentina look like?
The takeaway, if there is any, from these Argentine figures is that a standard-looking Phillips curve may require inflation be less than 10 percent and there be periods of instability so that Milton Friedman’s thermostat is not working. But if the thermostat is not working, then, the central bank is not doing its job. The Phillips curve, in other words, may never be very informative for places where central bankers are doing a great job anchoring inflation.
What Can Argentina Teach Us about the Phillips Curve?
By: David Beckworth – George Mason University
