Monday, April 15, 2013

On Wren-Lewis on the IMF

Recently, I have complained about Simon Wren-Lewis, the IMF research staff and commentary on an IMF staff paper.  Not to close a rhetorical loop, but just because it's what I believe, I am pleased to write that I think that Simon Wren-Lewis's comment on the IMF staff report is perfect

"the recent IMF study I discuss here shows, either low inflation or credible inflation targets (or both) seem to have weakened the impact of the output gap on inflation, "

(also somewhat briefer than my series of posts and comments on other blogs).


Julian Janssen said...

Hopefully I'm not terribly obviously wrong in what I am about to suggest, but couldn't the connection between inflation and the output gap also be weakened by (a) underestimating potential output or (b) increasing share of productivity that comes from technology, as opposed to capital and labor? I appreciate greatly if you choose to disagree with my suggestions.

paine said...

Look deflation is an issue when contractions begin at a low rate of wage inflation

The CB knows enough to prevent deflations
Even if only by converting them into Nippon style
Wobbly drunk staggers along the zero line

Yes i'll readily disclose
I refuse to consider
--- in this context---
That mass agent expectations
Can converge to coherence fast enough
To impact real output