tag:blogger.com,1999:blog-2499715909956774229.post3516939170920792341..comments2024-05-02T08:05:13.647-07:00Comments on Stephen Williamson: New Monetarist Economics: More on Deflation TrapsStephen Williamsonhttp://www.blogger.com/profile/01434465858419028592noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-2499715909956774229.post-15707292351615852942010-08-31T19:36:26.837-07:002010-08-31T19:36:26.837-07:00In term of dynamics, rather than the steady state,...In term of dynamics, rather than the steady state, the first eqn isn't<br />R_t+1 = a(p_t-p*) + r + p_t?<br /><br />the Fisher eqn in short run becomes:<br />R_t = r + p_t<br /><br />Indeterminacy happens or not depend on whehter "a" is greater unity. The 3 consequences mentioned before happen nevertheless (yes here is anonymous #2 & #3 of previsous post). <br /><br />It doesn't matter whether Fisher eqn holds in short run, what needs for a deflation trap is a line with slope higher than the Taylor's rule. Unfortunately it is not the analysis of our Nobel prize winner. Maybe he has some brand new monetary theory in his mind...Anonymousnoreply@blogger.com