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Friday, June 29, 2007

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Arthur Eckart

The "Great Inflation" and the "Great Moderation" periods may be explained, to a large extent, by a long-wave boom and bust business cycle (caused by uneven labor supply). Over the Great Inflation period, potential output was overstated, which lead to inflation. Over the Great Moderation period, potential output was understated, which lead to disinflation. Also, errors in monetary policy are more forgiving in a disinflationary period than in an inflationary period.

Duncan Todd

What about demographics? Nir Jaimovich and Henry Siu's excellent article, "The Young, the Old, and the Restless" (2007) provided a new perspective to this issue.

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