Quantcast
Channel: Comments on The Lucas critique cuts both ways
Viewing all articles
Browse latest Browse all 10

By: William Peden

$
0
0

dtoh,

1. A lack of evidence for particular departures from the NRH, given at least some work in pursuit of that, is positive evidence for the NRH. I agree it’s far from conclusive evidence and I agree that’s the nature of macroeconomics.

2. As I understand it, hysteresis is supposed to be about the permanent effects of a change in NGDP (or money supply etc.). This is one argument for gradualism in reducing inflation given high inflation expectations, at least where that’s an option; conversely, it’s an argument for rapid returns to pre-existing NGDP trends. And I can see it as an argument against large persistent variance in NGDP. However, a higher NGDP target is about the rate of change. I don’t see the relevance of a rate of change to either variance or changes in levels per se.

3. “Fundamentally I think you can posit that regardless of hysteresis, financial asset prices are less sticky than wages and therefore a high target will lead to more rapid adjustment.”

I don’t follow. Adjustment to price changes?


Viewing all articles
Browse latest Browse all 10

Trending Articles