On September 28, Peterson Institute economist Adam Posen, who is also an adviser to the Bank of England, gave a speech in which he urged stronger action by central banks to combat the slowdown. The risks of doing too little are greater than the risks of doing too much, he said.
On September 27, the Federal Reserve Bank of St. Louis published a study of the impact of large-scale asset purchases by the Federal Reserve on inflationary expectations. It finds that asset purchases do raise inflationary expectations, but modestly.
In a September 24 speech, Federal Reserve Bank of Philadelphia president Charles Plosser discussed a number of recent changes in Fed procedures. He believes it would be better for it to have more rules and less discretion. Economist Stephen Williamson commented on Plosser’s speech on September 26.
On September 23, the Federal Reserve Bank of New York announced a new project to improve the quality of surveys of inflationary expectations.
In a September 21 commentary, International Monetary Fund economist André Meier examined inflation during episodes of large output gaps (high unemployment, underutilized factories etc.). He finds that unused productive capacity puts heavy downward pressure on inflation.
In a September 18 post, Bentley University economist Scott Sumner expressed concern that too many monetary policymakers are targeting inflation rather than the price level. (Targeting the price level would permit a temporarily higher inflation rate after a period of deflation.)
Also on September 18, Stanford economist John Taylor posted a commentary comparing deflation in the U.S. and Japan.
On September 17, the Federal Reserve Bank of Cleveland updated its estimate of future inflation based on rates on Treasury inflation-protected securities. Evidently, markets expect an inflation rate of just 1.54 percent over the next 10 years.
Also on September 17, Lars E.O. Svensson, deputy governor of the Swedish central bank, gave a speech saying that monetary policy had little to do with the economic crisis. He believes that the best thing central banks can do to contribute to recovery is stick to their inflation targets.
In a September 15 commentary, some Wharton School economists discussed the problem of deflation.
A study from the Federal Reserve Bank of St. Louis posted on September 14 examined the relationship between the federal funds rate and the inflation rate.
I last posted items on this topic on September 15.
Bruce Bartlett is an American historian and columnist who focuses on the intersection between politics and economics. He blogs daily and writes a weekly column at The Fiscal Times. Read his most recent column here. Bartlett has written for Forbes Magazine and Creators Syndicate, and his work is informed by many years in government, including as a senior policy analyst in the Reagan White House. He is the author of seven books including the New York Times best-seller, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (Doubleday, 2006).
