- Links for 03-26-15
- 'Fed Should Push Unemployment Well Below 5%, Paper Says'
- The 'Audit' the Fed Crowd
- 'Anti-Keynesian Delusions'
Posted: 26 Mar 2015 12:06 AM PDT
Posted: 25 Mar 2015 01:09 PM PDT
Larry Ball tells the Fed to be very patient when it comes to satisfying its mandate to pursue full employment:
Fed Should Push Unemployment Well Below 5%, Paper Says: The Federal Reserve should hold short-term interest rates near zero long enough to drive unemployment well below 5%, even if it means letting inflation exceed the central bank's 2% target. That's according to Laurence Ball, economics professor and monetary policy expert at Johns Hopkins University...
Mr. Ball says the Fed could create more jobs by letting the unemployment rate fall lower. It should seek to push the rate "well below 5%, at least temporarily," he writes. That could help bring some discouraged workers to reenter the labor market, as well as help the long-term unemployed find work and involuntary part-time workers find full-time jobs, he said.
"A likely side effect would be a temporary rise in inflation above the Fed's target, but that outcome is acceptable," writes Mr. Ball... U.S. inflation has been undershooting the Fed's target for nearly three years.
Mr. Ball's view is not shared by many Fed officials...
Posted: 25 Mar 2015 11:24 AM PDT
Audit the Fed?:
Posted: 25 Mar 2015 09:14 AM PDT
Paul Krugman continues the discussion on the use of the Keynesian model:
Anti-Keynesian Delusions: I forgot to congratulate Mark Thoma on his tenth blogoversary, so let me do that now. ...
Today Mark includes a link to one of his own columns, a characteristically polite and cool-headed response to the latest salvo from David K. Levine. Brad DeLong has also weighed in, less politely.
I'd like to weigh in with a more general piece of impoliteness, and note a strong empirical regularity in this whole area. Namely, whenever someone steps up to declare that Keynesian economics is logically and empirically flawed, has been proved wrong and refuted, you know what comes next: a series of logical and empirical howlers — crude errors of reasoning, assertions of fact that can be checked and rejected in a minute or two.
Levine doesn't disappoint. ...
He goes on to explain in detail.
Update: Brad DeLong also comments.
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