In 1977, when I started my first job at the Federal Reserve Board as a staff economist in the Division of International Finance, it was an article of faith in central banking that secrecy about...
I’m just opposed to a pure inflation-only mandate in which the only thing a central bank cares about is inflation and not employment.
My bottom line is that monetary policy should react to rising prices for houses or other assets only insofar as they affect the central bank’s goal variables – output, employment, and inflation.
To me, a wise and humane policy is occasionally to let inflation rise even when inflation is running above target.
One common way of judging whether housing’s price is in line with its fundamental value is to consider the ratio of housing prices to rents. This is analogous to the ratio of prices to dividends...
People stop buying things, and that is how you turn a slowdown into a recession.
Productivity growth, however it occurs, has a disruptive side to it. In the short term, most things that contribute to productivity growth are very painful.
Stores don’t order merchandise unless they think they can sell it right away. Manufacturers and builders don’t produce unless they have buyers lined up. My business contacts describe this as a paradigm shift and they...
Individuals out of work for an extended period can become less employable as they lose the specific skills acquired in their previous jobs and also lose the habits needed to hold down any job.
The principle that a central bank, charged with controlling inflation, should be independent from the government is unassailable. It may also be true that it’s easier for the central bank to guard its independence from...
Strapped by tight credit and plummeting sales, businesses have overhauled the way they manage supply chains, inventory, production practices and staffing.
The trust institutions have in the marketplace, the confidence customers and suppliers and workers and employees have, are very important to a business’s effectiveness.
Although most Americans apparently loathe inflation, Yale economists have argued that a little inflation may be necessary to grease the wheels of the labor market and enable efficiency-enhancing changes in relative pay to occur without...
Uncertainty about sales impedes business planning and could harm capital formation just as much as uncertainty about inflation can create uncertainty about relative prices and harm business planning.
When you’re unemployed for six months or a year, it is hard to qualify for a lease, so even the option of relocating to find a job is often off the table.
It slightly worries me that when people find a problem, they rush to judgment of what to do.
Firms don’t just try to pay as little as possible to get the needed bodies on board; when there is unemployment, they ask themselves how wage cuts would affect the behavior of the employees. Would...
While admirers of capitalism, we also to a certain extent believe it has limitations that require government intervention in markets to make them work.
Inequality has risen to the point that it seems to me worthwhile for the U.S. to seriously consider taking the risk of making our economy more rewarding for more of the people.
In government institutions and in teaching, you need to inspire confidence. To achieve credibility, you have to very clearly explain what you are doing and why. The same principles apply to businesses.
Business students are very oriented to playing a role in the real world and accomplishing something, not training themselves to be scholars and contribute to the literature. Teaching in that kind of environment has focused...
A clear lesson of history is that a ‘sine qua non’ for sustained economic recovery following a financial crisis is a thoroughgoing repair of the financial system.
Long-term unemployment can make any worker progressively less employable, even after the economy strengthens.
We need to increase the transparency of shadow banking markets so that authorities can monitor for signs of excessive leverage and unstable maturity transformation outside regulated banks.
In the long run, outsourcing is another form of trade that benefits the U.S. economy by giving us cheaper ways to do things.
Will capitalist economies operate at full employment in the absence of routine intervention? Certainly not. Are deviations from full employment a social problem? Obviously.
I am anxious to fix welfare. There has to be more training and child care.
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