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Sunday, April 12, 2009

Woodward and Hall: The Fed Needs to Make a Policy Statement

Susan Woodward and Robet Hall on concerns about inflation:

More and more one hears the concern that the Fed has embarked on an expansionary policy that will result in high inflation once the economy returns to normal. John Taylor, a leading expert in this area, put the argument as follows...

[T]he question John Taylor posed–how can the Fed control inflation in coming years when it is committed to have a large volume of reserves outstanding to finance its purchases of illiquid assets?–has a simple and effective answer...

The (good, but wonkish) answer is here.

    Posted by on Sunday, April 12, 2009 at 02:43 PM in Economics, Inflation, Monetary Policy | Permalink  TrackBack (0)  Comments (17)

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