Rogoff - learning to like inflation

Ken Rogoff has come out strong in calling for higher inflation to get the economy moving. His thought is to move he target to 2-4%. Below is a video from the PBS Newshour where Rogoff is on a panel with Paul Krugman saying the same thing.

Watch the full episode. See more PBS NewsHour.

Assessing Quantitative Easing

The Wall Street Journal has a good graphic assessing Quantitative Easing - basically it shows that QE did not accomplish very much in terms of stimulating the economy. I think this is a bit misleading since I do not think that was really the goal of the QE program. Basically, it was to prevent deflation and move investors away from safe haven of government bonds (by lessening the benefits of holding bonds). The argument that a liquidity trap makes monetary policy all but ineffective seems to hold up. So, while QE may not have gotten us out of the hole we are in, it did prevent deflation which would have made things worse - and that is the real measure of its success.




Here is the graph:

Inflation on PBS Newshour

Paul Solman has a good piece on how inflation is measured and what inflation means in this video clip from the PBS Newshour.

Watch the full episode. See more PBS NewsHour.

Inflation & Unemployment

David Leonhardt has a good column in today's New York Times about the sputtering economy - the slow sluggish jobless recovery. In it he has this good graph of unemployment and inflation that points to the reality that unemployment, not inflation, is the big problem in the economy.

Commodity Prices and Core Inflation

Paul Krugman has a good chart showing the relationship between commodity prices and the CPI - basically that commodity prices fluctuate greatly but the CPI has stayed the same - and how calls of hyperinflation seem overblown (at least for the foreseeable future)

Unemployment & Inflation - This time is different, not so much

Paul Krugman has good post on how high unemployment is affecting inflation unemployment in the way the Phillips curve would predict (he also has a good chart comparing this recession to earlier ones in regards to inflation and unemployment). He also notes alarm that the Fed seems to be ignoring this piece of economic theory.