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nairu

A NAIRU Barrier

By |2017-06-05T18:12:31-04:00June 5th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

In the framework of government policy, there is enormous interest in relating the specific condition of any economy to how the government must respond to it. This, of course, presupposes that this is the case, that there must be some impartial body or official standing between what would otherwise be free market excesses. The entire literature devoted to answering the [...]

Durable Goods May Not Actually Show Recession, And That Is The Worst Case

By |2016-03-28T13:14:31-04:00March 28th, 2016|Economy, Federal Reserve/Monetary Policy, Markets|

Orthodox economic theory assigns recession to some exogenous “shock.” Without it, an economy is supposed to grow indefinitely along its trend or potential baseline so long as NAIRU (non-accelerating inflation rate of unemployment) is maintained. As you can imagine, economists and policymakers spend most of their time on that latter part which is one reason, though more so ideology, that [...]

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