23 Responses to “All hail Bryan Caplan”
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A slightly off-center perspective on monetary problems.
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23 Responses to “All hail Bryan Caplan”
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23. April 2013 at 17:36
A few problems with this article:
1. If wage rates are “inflexible”, they are inflexible by choice. There is no law of the universe, akin to the law of gravity, that compels workers and employers to not reduce wage rates, such that resulting unemployment is “involuntary”. If workers and employers refuse to reduce wage rates, and that results in unemployment, then that unemployment is voluntary, not involuntary. Employers refuse to hire workers below wage rate $X voluntarily, and workers refuse to apply for jobs below wage rate $X voluntarily.
2. Caplan, like Dr. Sumner, overlooks the effects that inflation itself has on wage rigidities. However, he does come close to it, when he said “When workers don’t get a raise, they’re often disappointed or angry.” Workers are generally risk averse, and they are often disappointed by lack of pay raises because without pay raises, they know, consciously or unconsciously, that they won’t be able to “keep up” with price inflation, and as a result will experience a reduced standard of living. It is important to note that this is the case even if prices aren’t actually rising for a period of time. The psychological effects of inflation are very deep rooted with workers. Why workers? It’s because workers are, by the nature of wage contracts, relatively risk averse and relatively sensitive to inflation. Every worker is born into the inflationary system, and from birth to death, they are faced with perpetually increasing prices. Even if prevailing monetary conditions, deflationary conditions, warrant wage cuts to clear the labor market, workers (and employers) still hold out for higher wage rates that are a function of inflation psychology. How could any serious economist ignore this? It’s staring at us in the face.
Bottom line, even if you don’t agree with my inflationary psychology assessment (there is of course a strong incentive among the MM crowd to deny it), there is still the fact that to the extent employers and workers refuse to cut wage rates, any resulting unemployment that arises from this is voluntary, not involuntary.
This is neither a “cavalier” nor a “callous” approach to unemployment. It is a respect for the choices that others make, with their own bodies and property. If a worker refuses to work for less, and if an employer refuses to pay less, by what right does anyone have to essentially trick these people into believing that their expectations are “correct”, by inflating the money supply and hoping that the nominal demand for labor rises, thus justifying those hold out prices?
It’s easy to fall prey to the notion that because the central bank is in charge of the money, that they have to deal with the problems they create, and it is their duty, their obligation, to continue to perpetuate the inflationary psychology and reward uninformed decision making. So it would appear that if inflation does exacerbate wage rate rigidities, then why not inflate the money supply to whatever degree is necessary that would ensure inflationary psychology is continually rewarded. But this of course ignores the distortions to economic calculation that inflation brings about, which is willfully ignored by MMs, and all other inflationists, for rather understandable incentive issue reasons.
Finally, Caplan’s claim that the great recession was/is most likely due to “tight money”, is a settling for the least worst among alternative explanations, given that he rejects the credit circulation boom bust theory.
23. April 2013 at 17:46
Geoff,
When Caplan says “When workers don’t get a raise, they’re often disappointed or angry.”, he says it only in contrast to “But when workers lose their jobs, they literally weep.” There’s no point quoting one without the other.
I’m pretty sure your points 1 and 2 are contradictory.
23. April 2013 at 18:28
Ashok:
“When Caplan says “When workers don’t get a raise, they’re often disappointed or angry.”, he says it only in contrast to “But when workers lose their jobs, they literally weep.” There’s no point quoting one without the other.”
That’s why I said that one quote is the closest he comes to the argument I am making about inflationary psychology. Regardless of whether that quote is in opposition to another, has no bearing on my point about that quote.
“I’m pretty sure your points 1 and 2 are contradictory.”
Pretty sure they’re not. Inflationary psychology is a choice, just like recognizing it is in one’s interests to accept a pay cut. It isn’t deterministic. It is something that, for whatever reason, many workers put themselves in a position of believing.
23. April 2013 at 19:01
Kudos to Caplan.
And yes—until free marketeers and Market Monetarists place emphasis on employment and job growth, they forget what macroeconomics is all about: to create prosperity.
Models, and theories and ideologies and sadomonetarism do not cut it, if there is not strong job growth.
Side note: In 1966, the Fuller Brush Co. abandoned tradition and hired 17,500 women.
They could not find enough Fuller Brush Men. The unemployment rate was 3.8 percent then.
In the 1960s, real per capita income rose by more than 30 percent in the USA.
Yet today, you have “economists” pontificating that the 1960s was a failure, as it led to inflation.
But ask anybody who looked for work what the 1960s was like.
There are some things more important than keeping inflation at microscopic rates. Prosperity and job growth are two of them.
23. April 2013 at 19:27
Geoff,
The “trick” is to do nothing and let workers and business expectations drift lower. Workers took out mortages, businesses borrowed, and people genrally expected 5% NGDP growth for a long time. Would you blame a girl who took a drink laced with rohypnol from a handsome and charming stranger, and got date raped later on that night? If you say no, you’ve got some compassion. If you say yes, THEN you really are a callous and insensitive p***k, just like you are demonstrating with worker issues. You just got done reading other reasons why workers are resistent to wage cuts, Productivity, morale, and the most important: Debt, debt debt. Now, typically the response of brain dead cultish Austrians is to say the “boom shouldnt have happened in the first place” if people took out nore than they could, too friggin bad.” Or, “they should work longer hours. Like that willl help when some workers are working two or three jobs just to stay alive (By the way Scott, that’s a recipe for a howling mob of workingmen and women to come after your blood. Work longer for less pay, are you kidding me!) That doesn’t help workers in the bust! Typically the workers are the innocents in this story, and the “handsome stranger who drugged and date raped them” are the private banks, not the Fed.
Inflationary psychology? Then you should support NGDP level targeting, but with a very low level target, like zero or 1% WOne of the things that will happen in that case is that most of the growth will take place in the form of supply side deflation, or “good” deflation, the kind that Austrians rightly like. After many years, lets see in a recession if your theory is correct. if wages fall more easily then you’ll have been proven right (remember good deflation is totally different from bad deflations, wages don’t move at all in good deflation, or actually move higher)
But you wont support it. i know. Why? Economic Calculation. Capital Misallocation. The standard whiney responses of brain dead people like Bob Roddis on Murphy’s blog.
Ive asked for examples of economic miscalculation, but you haven’t given any. Is it in your opinion, when workers are indusries that they shouldn’t be and projects get started that their are no real resources for? If so, then economic calculation IS AIDED by NGDPLT and printing money. Why? The typical cases you see of miscalculation are here in the bust. It isn’t that waiters are working as high priced lawyers, or carpenters as surgeons. Its the other way around. Its college graduates in things like engineering and medicine, pehaps law working low wage jobs just to survive. If anything they belong in their trained fields. The discoordination is OPPOSITE to what the Austrians say.
And as for unsutainable projects, if what the austrians say is true, then those projects must have low profit margins and rates of return. The cost of inputs, all other things being equal, must be high reflecting the “bricklayer” argument that the Austrians love. Except those projects can be identified in the boom as having high or low profit margins, and in real time. And the cost of inputs aren’t high. The commodity bubble burst in 2008. The “secondary deflation” was more important than the ridiculous re-allocation story
By the way, when you mentioned “a productivity rule of inflation” did you mean something akin to what George Selgin proposed. If so then I’m shocked, shocked! (I like Casablanca 🙂 ) Youre better than Major Freedom, who was a mindless absolutist when it came to these things, and would accept nothing less than perfection, making it the enemy of the good
23. April 2013 at 19:32
Scott, I want to clarify. My aside to you was about the basic point you made a while ago, that total income and wages per houir are not the same thing. I agree its possible to cut wages and still maintain income, but only by working longer hours for less pay, and workers have a limited amount of hous in each day, and the political psychology of trying to sell it to workers is nightmarish. Thats why NGDPLT is more feasible
23. April 2013 at 19:46
Another thing in Caplan’s essay that I loved so much was the “…. welfare state growing like a weed argument.
One of the things that enrages me about the Austrians, gold nuts and freaks so much is how badly they sabotage the cause economic freedom.
If we have two conceivable choices of government intervention in a political environment to solve a masive problem, (ancapism is not politicall feasible here) Choice one requires a massive amount of incentive destroying government intervention, Choice two has a thousand times government lighter touch, barely has any noticeable costs, and still solves the problem nicely. Any sane or ratinal liberatarian will choose choice two over one, but nooooo. not the austrians. Not those imbeciles. They prefer to pull out of their collective rear ends imaginary problems like “economic calculation” or capital misallocation” and make the perfect the enemy of the good. So by default the left wins, and we are left with choice one
23. April 2013 at 21:03
It’s really nice to see a libertarian taking these positions. The amount of libertarians who eschew orthodox macro-by which i mean a new keynesian view of the world-has always seemed strange to me.
23. April 2013 at 21:33
Brilliant series of tweets by @ECONOMISTHULK
recently, everyone check ’em out: http://twitter.com/ECONOMISTHULK
I especially liked this one: https://twitter.com/ECONOMISTHULK/status/326380124935163904
ChargerCarl, Bryan Caplan is a pretty smart guy, has some resistance to groupthink (has other intellectual biases, though).
23. April 2013 at 21:36
What does Scott think of this (particularly the 2010 Krugman&Egertsson paper) http://noahpinionblog.blogspot.com.au/2013/04/krugtron-invincible.html
23. April 2013 at 21:44
Is Market Monetarism Free Market? http://ashokarao.com/2013/04/23/market-monetarism-is-not-really-free-market/
23. April 2013 at 22:17
Scott,
That was a great article. I can see why you said read the whole thing given that his advocation of NGDP targeting came at the end. A few days ago I heard you say in an older interview (early 2012) with Russ Roberts on Econtalk that even if perfect supply side policies were in place nominal GDP wasn’t growing fast enough for a vigorous recovery. That made me think. What if supply side issues like regulations are the real reason for slow NGDP growth? Isn’t it possible that better legislation (repealing minimum wages, occupational licensing, bank capital requirements, etc) would lead to faster nominal and real growth?
What I think has happened is that the Fed has been very loose with money at the same time as banks have become very tight. If banks were making more loans, the Fed wouldn’t need to keep pushing money into their excess reserves. I believe this is why it is so hard to take the claim seriously that the Fed has been tight. The Fed has been very loose by many standards at the same time as bank lending, the transmission method for monetary policy, has become very tight. Isn’t it possible that slow growth in NGDP or M2 is outside of the Fed’s control and may be largely due to things like regime uncertainty, Basel regulations, and Dodd-Frank?
24. April 2013 at 05:12
Saturos, Yes, Krugman has been correct about inflation and interest rates. I’ve been correct about inflation and interest rates and Swiss exchange rates and Japanese exchange rates. I.e., unlike Krugman I believe that central banks can depreciate currencies when in a “liquidity trap.”
24. April 2013 at 05:14
Saturos, Do you have a link to that article?
John, The Fed can offset the impact of any regs on NGDP.
24. April 2013 at 05:16
Scott,
Is it that Krugman thinks countries cannot depreciate currencies on a “liquidity trap” or that a liquidity trap is a necessary condition for fiscal policy. I know this is somewhat of a false dichotomy, but I would definitely place him in the latter.
After all, in theory if the government printed and sent checks of new money, it would ipso facto depreciate.
24. April 2013 at 06:14
My take: http://theredbanker.blogspot.com/2013/04/bryan-caplan-free-market-evil-doers.html
Especially relevant here for Scott Sumner and MMers:
“Monetary policy is NOT more efficient than fiscal policy, merely more politically feasible (at least in the USA. In Europe, neither seem to be politically do-able).
The latest quarterly review from Hoisington Investment makes that case very clearly: “Not only does the Fed not control money but it cannot determine velocity either” and “[t]wo flaws exist in the belief that the Fed can create rising aggregate demand. First, they do not directly control M2. Second, velocity is almost entirely outside their control”.
24. April 2013 at 06:31
Scott,
I’ve read your work on how they get around banks holding excess reserves so I get that are methods that might be possible in a vacuum. However, political realities prevent them from many different types of policy. Plus, I doubt the public would like 4-5% inflation when real GDP growth is slow.
24. April 2013 at 06:32
Scott, I was talking about this paper Noah linked to: http://www.princeton.edu/~pkrugman/debt_deleveraging_ge_pk.pdf
24. April 2013 at 07:41
That was the most insightful thing I’ve ever read by Caplan. I don’t share a lot of his policy goals, but he is absolutely correct that substantial unemployment will be a hindrance in making progress towards them. Perhaps one of the most frustrating aspects of this debate is the idea that there should be sides to it. There really is no reason for the left or the right to prefer unstable monetary policy. I don’t count Austrians because that’s not a political ideology but a actually a monetary ideology…
24. April 2013 at 09:41
Edward:
“By the way, when you mentioned “a productivity rule of inflation” did you mean something akin to what George Selgin proposed. If so then I’m shocked, shocked! (I like Casablanca ) Youre better than Major Freedom, who was a mindless absolutist when it came to these things, and would accept nothing less than perfection, making it the enemy of the good”
Are you complimenting me on what you perceive as my approval of *some* coercion against innocent people? Um, OK. Whatever makes you feel better I guess.
Yes, I do think that people hurting you, and other strangers, to help themselves, especially myself, can be justified in certain situations. I’m not perfect. If the outcome is that more people will be more happy than unhappy, then the utilitarian considerations would have the harm you experience as justified. If most people were happy with slavery, then I would have no problems with someone selling you into slavery, if in some way myself and my family benefited.
Is my sanctioning and approval of you being harmed, for my benefit, or for the benefit of others, that which you appreciate about my argument that the productivity rule for inflation is closer to a free market than NGDPLT? That it tells you “There are others in this world like me who are also approving of violence against the innocent”?
“The “trick” is to do nothing and let workers and business expectations drift lower.”
Whose trick is that? Not mine. I want workers and businesses to use their property any way they want, and that means private control over money, so that expectations of money become interlocked within the diverse set of expectations in the whole division of labor. If money producers invest too much relative to goods, they incur losses. If goods producers produce too much relative to money, they incur losses.
The trick of monetary policy is to reward misinformed expectations of optimal wage rates, which crystalizes in lower real wages from price inflation.
“Workers took out mortages, businesses borrowed, and people genrally expected 5% NGDP growth for a long time.”
You seem to be imagining something you want to be true, and not separating that from what is true.
Hardly any economist looks at NGDP, let alone the working class in general. NGDP is something that virtually no business even takes into account when planning and investing.
“Would you blame a girl who took a drink laced with rohypnol from a handsome and charming stranger, and got date raped later on that night? If you say no, you’ve got some compassion. If you say yes, THEN you really are a callous and insensitive p***k, just like you are demonstrating with worker issues.”
Excellent use of spoiling of the well fallacy. Lump in free market money arguments and wage rates fluctuating in a context of free market money, with rapists.
You *almost* convinced me that I am akin to a rape apologist.
“You just got done reading other reasons why workers are resistent to wage cuts, Productivity, morale, and the most important: Debt, debt debt.”
Debt is a contract between borrower and lender, not borrower and everyone who is coerced into the dollar system. Speaking of callousness, you are deliberately calling for negative externalities to be imposed on those who don’t spend more than they earn. Would you externalize onto others sex as well? Haha.
BTW, debt is exacerbated with inflation, for it is through credit expansion (debt) that inflation primarily takes its form. What you are essentially doing is calling for more debt to solve (what you perceive as a) problem of too much debt. You’re chasing your own tail.
Debt can be liquidated. Debt can be renogiated. There is nothing sacrosanct about debt. Furthermore, inflation doesn’t even help those in debt, to the extent that borrowers experience inflation primarily through rising prices instead of rising incomes. For most workers, their income lags inflation, and so those who are indebted will be worse off, not better off, because not only do they owe the same interest and principal, but they now have to pay more for goods, which means fewer goods purchased.
“Now, typically the response of brain dead cultish Austrians is to say the “boom shouldnt have happened in the first place” if people took out nore than they could, too friggin bad.” Or, “they should work longer hours.”
The typical free market response to such brain dead cultish inflationist progaganda, is to say that if you really want to help people in a division of labor, then the best help you can give them is not through authoritarian doctrine, but to ensure that their decisions are optimally informed through the price system. But you won’t support that. You want a price system ravaged by arbitrary inflation rules that hampers individual’s ability to calculate in a division of labor. That harms their interests, despite the fact that “spending” and “output” are growing. For this “spending” and “output” are bringing about real investment decisions that are physically unsustainable.
Your helping of others is akin to keeping them drunk through increasing doses of alcohol, to prevent them from experiencing hangovers. Some help.
Also, your caricature of Austrianism is clearly uninformed, since I know that Austrian economics is wertfrei. It’s not a normative field of inquiry. Also, be advised that I am not an Austrian, so whatever garbage you spew about them to satiate your warped psychology of authoritarianism, has nothing to do with me.
“Like that willl help when some workers are working two or three jobs just to stay alive”
Gee, do you think that maybe there are those who need that many jobs because price inflation has made it necessary?
I don’t prostrate under “official” inflation statistics that mask the true state of inflation. Most of us know the CPI is worthless. That if the method of calculating price inflation used in 1980 was still used, the data would show close to double digit inflation rates.
“(By the way Scott, that’s a recipe for a howling mob of workingmen and women to come after your blood. Work longer for less pay, are you kidding me!)”
Oh I get it. You’re afraid. Now it makes sense. Fear.
“Inflationary psychology? Then you should support NGDP level targeting, but with a very low level target, like zero or 1%”
The only way I could “win” in such a “support”, would be if the guns I influence outnumber the guns you influence. I might get some sense of satisfaction from that, but it would likely be short lived. I couldn’t imagine feeling good that people are coerced into the dollar system through mandatory dollar taxation and dollar legal tender laws.
If there was 0% NGDPLT, and it just so happened that prices perpetually fell over time, then an artificially imposed deflationary psychology would likely arise (especially after many generations). This would then exacerbate wage rate inflexibility in the other direction.
“One of the things that will happen in that case is that most of the growth will take place in the form of supply side deflation, or “good” deflation, the kind that Austrians rightly like. After many years, lets see in a recession if your theory is correct. if wages fall more easily then you’ll have been proven right (remember good deflation is totally different from bad deflations, wages don’t move at all in good deflation, or actually move higher)”
My theory isn’t that wage rates are that flexible. Many years of falling prices would likely have to pass before such downward flexibility would be prevalent. But the Fed hasn’t let that happen. We are still living in an inflationary world.
“But you wont support it. i know. Why? Economic Calculation. Capital Misallocation. The standard whiney responses of brain dead people like Bob Roddis on Murphy’s blog.”
Are his responses as “standard” and “whiny” as the stuff you spew on this blog? You’re writing a biography under a pen name.
“Ive asked for examples of economic miscalculation, but you haven’t given any.”
Well, you haven’t actually asked for any, and I couldn’t show you them even if you did ask, because they’re not observable. If millions of independent projects are started in a division of labor, there is no scientific rule or set of equations that can distinguish manlinvestment from other investment. Asking for “examples” presupposes such equations exist.
“Is it in your opinion, when workers are indusries that they shouldn’t be and projects get started that their are no real resources for?”
Close. You have to take all workers together, but treated individually. Workers are employed at independently owned and controlled businesses, throughout the country, and, today, throughout the world, under the same division of labor.
There are constraints involved as to how many industries of a specific time horizon can be completed, given the current and future level of technology and productivity. Since you stated that you know some people like to use the bricklayer analogy: An economy that can only output 40,000 bricks, cannot accommodate the completion of projects that require 50,000 bricks. What central banking does is that it masks the requisite information contained in prices and interest rates that would otherwise tell investors that only 40,000 bricks are/will be available. Please note that these 40,000 bricks represent the totality of all capital in an economy. It’s an analogy. Investors who start projects that require 50,000 bricks won’t incur losses until they realize their error in the physical sense, in which case layoffs and output declines (recessions) occur that way, which we would likely observe as runaway inflation in a context of central banks refusing to let the liquidations occur until no amount of inflation can stop them, or if the central bank refuses to runaway inflate as what would be required to keep the investors fooled, which we observe as deflationary recessions, along with lots of whining from MMs.
“If so, then economic calculation IS AIDED by NGDPLT and printing money. Why? The typical cases you see of miscalculation are here in the bust.”
Actually the miscalculations are committed during the boom. The bust is the cure. The bankruptcies, the layoffs, these are health inducing outcomes. Sure, medicine tastes bad. Sure, it hurts going through withdrawal after years of excess. But those of us who are more concerned with the long term health of people, will say that people should be free to make their own decisions, and incur the costs of those decisions without those costs being externalized, so that they can distinguish good decisions from bad decisions, and make their own lives better.
By what right does B, who spends more than they earn (indebted), who is profligate, who makes bad business decisions, benefit at the expense of A, who does not spend more than they earn, who is not profligate, who makes good business decisions even in a context of price signal distortions?
Inflation does not help everyone. It helps some and harms others in the short run, and it harms everyone in the long run.
During the 1990s and 2000s, the people who spent way more than they earned, who borrowed to consume, who invested in the housing bubble, are these people more human, more important, are there interests more moral, than those who did not?
“It isn’t that waiters are working as high priced lawyers, or carpenters as surgeons. Its the other way around. Its college graduates in things like engineering and medicine, pehaps law working low wage jobs just to survive. If anything they belong in their trained fields. The discoordination is OPPOSITE to what the Austrians say.”
No, it’s not opposite at all. It’s perfectly consistent. Austrian theory does not make predictions regarding wage rates of specific jobs in specific industries. As far as I can tell, they say only the market process itself can reveal what the wage rates for specific jobs should be. You’re straw manning them.
“And as for unsutainable projects, if what the austrians say is true, then those projects must have low profit margins and rates of return.”
That isn’t true. By the very definition of malinvestment, it is investment that is physically unsustainable, but nominally profitable (which is why the malinvestments were started in the first place). Of course, after some point, the losses will be revealed, either through runaway inflation and forget the currency, or deflation and save the currency responses.
“The cost of inputs, all other things being equal, must be high reflecting the “bricklayer” argument that the Austrians love. Except those projects can be identified in the boom as having high or low profit margins, and in real time.”
Nominal profit margins are not able to reveal which projects are physically sustainable and which are not. That’s the whole point. Your mind seems to gravitate towards trying to find price signals that would reveal the malinvestment, when it is precisely the price signals themselves that are distorted and not able to communicate real resource constraints throughout the economy, until its too late.
“And the cost of inputs aren’t high. The commodity bubble burst in 2008. The “secondary deflation” was more important than the ridiculous re-allocation story”
The whole economy was, and still is, in a bubble. It’s not just housing and it’s not just commodities. These bubbles are called bubbles because of ex post facto judgments in a context of the central bank reinflating before more industries go bust. Recall that even the car industry was in a bubble. Since 2008, the government has papered over the problems by absorbing much of the losses due to the fact that the government has a (false) aura of safety and security. Of course, it was a short term solution, and at some point, the losses will be revealed there, along with more losses from the malinvestment since 2008.
Secondary deflation helps liquidate malinvestments. The whole reason deflation occurs is because people raise their cash preference and reduce either consumption, or investment, or both. It’s a signal that something is wrong on the real side. Rather than intepreting the falling NGDP as purely a “failure” on the central bank’s part (which of course presupposes the nonsensical dogma that central banks can inflate away the problems of inflation), it should rather be treated as a signal that something was/is seriously wrong with the investments that have been made over the years.
Papering over these problems is a short term solution, and not even a good solution at that, for it hampers investors from being able to fix the problems.
You MMs constantly look to the central bank to solve the problems that the central bank itself generates. Free market advocates such as myself look to entrepreneurs and investors (and workers), to solve their own problems, in a context of respect for private property rights.
25. April 2013 at 09:44
You don’t have to look any further than Spain to see what happens when employment is seen as a scarce resource provided by companies: Record unemployment and structural changes that are helping companies shed jobs, instead of make them more willing to hire.
The Spanish labor movement gets very mad as union power drops to levels that are still far higher than in the US. But despite the protections, it’s far better to be a worker in the US. While it’s easier to lose a job in the US, it’s far, far easier to get a new one.
Over 26% of Spaniards are unemployed, but they can’t all be ZMPers: The problem lies in that companies do not believe that more hiring will increase their bottom line. At such high unemployment levels, this cannot really be because hiring is too expensive.
It seems to me that there’s a huge opportunity for market monetarism ideas to take root in the European South labor movement, as a contrast with an old labor movement that teaches learned helplessness.
26. April 2013 at 09:14
The level of nominal wages= Money Paid to Labor Force/(Labor Force+Those Looking for Jobs). I created this horrible pseudoequation to point out that when people get fired, the average wage falls. Hence there’s no such thing as nominal wage rigidities.
You can try to create nominal wage rigidities but the market always wins.
27. April 2013 at 06:25
Ashok, You asked:
“Is it that Krugman thinks countries cannot depreciate currencies on a “liquidity trap”
Yes.
John, You said;
“Plus, I doubt the public would like 4-5% inflation when real GDP growth is slow.”
They certainly like it more than the alternative.
Saturos, I strongly disagree with that abstract, as Japan has had a highly expansionary monetary policy. And of course monetary policy in Japan is highly effective at the zero bound.