tag:blogger.com,1999:blog-2499715909956774229.post7058927009272924992..comments2024-03-22T22:37:02.639-07:00Comments on Stephen Williamson: New Monetarist Economics: Jawboning Makes a ComebackStephen Williamsonhttp://www.blogger.com/profile/01434465858419028592noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2499715909956774229.post-25754071509604690022018-06-27T16:29:33.810-07:002018-06-27T16:29:33.810-07:00Utilizing the following series for the period 1982...Utilizing the following series for the period 1982-May 2018, there is some evidence of a positive correlation between the Fed Funds Rate and the CPI inflation rate for Urban Consumers: <br />https://fred.stlouisfed.org/graph/?g=ki01 <br /><br />The correlation is quite low however and for the period July 2009 through January 2015 the Fed Funds had little or no perceptible influence on the CPI inflation rate. <br /><br />Movements in the Fed Funds Rate over the period commencing Feb 1 1993 and ending May 1 2018 has had little influence on the long-run average trend in CPI inflation over that more than 25-year time period. The Fed Funds Rate influence appears to be more pronounced over the timing of recessionary periods, than over the inflation rate. Recessionary periods are accompanied by temporary declines in the long-run trend CPI inflation rate, probably associated with declines in consumption rates in response to lost employment resulting from the economic recession's effect on business sentiment.<br /><br />Based on the record, one would not expect to see more than a modest change in the CPI inflation rate until the Fed Funds Rate reaches about 5%/yr, and then only in response to the resulting economic recession that the Fed Funds Rate will undoubtedly trigger.Old Eagle Eyehttps://www.blogger.com/profile/05270080708077871311noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-88594472398656778782018-06-24T01:01:17.306-07:002018-06-24T01:01:17.306-07:00Lee Ohanian Made a similar argument in his 2009 pa...Lee Ohanian Made a similar argument in his 2009 paper. He did ask a great question as to why did manufacturing industry hours drop so much more than the rest of the economy and well before any monetary contractions. He blamed unions. But in 1930 the federal government was not big enough to threaten anybody if they did not keep wages higher in response for protection against unions by Hoover.Jim Rosehttps://www.blogger.com/profile/02233668500637892711noreply@blogger.com