The Phillips curve
James Hamilton agrees that other factors are having a bigger impact on inflation than the unemployment rate right now. So is the Phillips curve the right framework for policymakers to think about inflation?
Are we in a new inflation regime?
By: James Hamilton – University of California, San Diego
A different look on productivity
Hlatshwayo and Spence argue that we might be looking at the slowdown of productivity in the wrong way: it might not be due to structural problems of the labor market or lack of investments instead the cause might be a shift in people’s priorities. As societies become wealthier, people’s main preoccupation is not only to become richer but also improve other measures of their well-being.
Should We Be Worried About Productivity Trends?
By: Sandile Hlatshwayo, Michael Spence – IMF, New York University
Mega mergers and inflation
Chicago Fed President Charles Evans has recently argued that big corporate deals could exert downward pressure on inflation as technology “keeps moving and disrupts”. Scott Sumner disagrees that technology is keeping down inflation and points to the slow nominal GDP growth.
What’s causing the low inflation?
By: Scott Sumner – George Mason University
Strong growth vs quality of life
Peter Victor, Michael Spence, and other economists have started to think about economies where strong growth is not the priority of policy makers. Instead governments could focus on making people “safe and content”, enabling them to work fewer hours, consume fewer resources and have higher quality of life. Alana Semuels does a great job explaining where this train of thought currently stands.
Does the Economy Really Need to Keep Growing Quite So Much?
From: the Atlantic
The effect of global value chains on inflation
As global value chains expand, Auer and al. argue, inflation can no longer be modeled as a country-centric phenomenon. Direct and indirect competition among economies seem to link national inflation rates to the global output gap.
The Globalisation of Inflation: The Growing Importance of Global Value Chains
Authors: Raphael Auer, Claudio Borio, Andrew Filardo
From: CESifo
Poking fun at the Financial Stability Board’s latest report
Pollyanna
By: John Cochrane – Stanford University
New global economic trends
A fundamental sea change is taking place in the global economy driven by a global productivity slowdown and demographic factors which are slowing population and labor force growth. How policymakers react to these global shifts will determine whether the future of the world economy will be grim or not.
The Global Growth Slump: Causes and Consequences
By: John C. Williams – Federal Reserve Bank of San Francisco
Productivity and inequality
Firms, both within countries and within sectors in the same country, are becoming increasingly unequal: the most productive ones are forging ahead leaving the rest behind. In particular, the productivity gap between between firms in the “top by productivity and those in the bottom increased by approximately from 2001 to 2012”. Berlingieri and al reach this conclusion after working on a new OECD data that is representative of the whole population of businesses in 16 countries. This productivity differential across firms, they add, can account for almost half the wage inequality among firms in the same sector: “The real engine fueling rising income inequality is firm-level inequality.”
A Study of 16 Countries Shows That the Most Productive Firms (and Their Employees) Are Pulling Away from Everyone Else
By: Giuseppe Berlingieri, Patrick Blanchenay, Chiara Criscuolo – OECD
Interest rates don’t matter
“Monetary policy doesn’t work through the interest rate channel—interest rates don’t matter.” Economists, argues Thornton, started believing in the power of interest rates in transmitting monetary policy after Volcker succeeded in bringing an end to the Great Inflation of 1970’s. But in the 90’s research by Ben Bernanke and Mark Gertler started questioning this belief. Fast forward 20 years, new research by Steve Sharpe and Gustavo Suarez confirms that the interest rate channel is very weak. Policymakers, concludes Thornton, need to “undertake a realistic appraisal of the extent to which changes in interest rates affect spending.”
The Limits of Monetary Policy: Why Interest Rates Don’t Matter
By: Daniel Thornton – Former VP Federal Reserve Bank of St Louis
