Kasriel: The Well-Known Relationship Between The Output Gap And Inflation

verfasst von CRASH_GURU, 21.04.2004, 12:42

-->One of the arguments advanced in favor of continued low and/or declining inflation is the wide output gap that exits today. The output gap refers to the difference between actual real GDP and some estimate of the economy’s potential real GDP. Potential GDP is thought to be a function of expected productivity and the expected labor force. It is well known that the wider the output gap today, the higher will be inflation tomorrow. To quote Professor Peter H. Lindert, who, in turn, was quoted in Thursday’s New York Times on a different economics matter, “Well known - but unsupported by statistics and history.”

"The highest positive correlation, between the output gap and inflation, 0.45, occurs when the output gap leads inflation by a whopping 12 years. Somehow I do not see the Federal Reserve explaining to the American people that it is raising or lowering the fed funds rate today in order to affect inflation 12 years from today."


<ul> ~ http://www.ntrs.com/library/econ_research/weekly/us/pc041604.pdf</ul>

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gesamter Thread:

• Kasriel: The Well-Known Relationship Between The Output Gap And Inflation - CRASH_GURU, 21.04.2004, 12:42
  • Re: Kasriel: The Well-Known Relationship Between The Output Gap And Inflation - Popeye, 21.04.2004, 13:12
    • Re: Kasriel: The Well-Known Relationship Between The Output Gap And Inflation - CRASH_GURU, 21.04.2004, 13:42