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Public Policy Brief No. 74Understanding Deflation
Most recent discussions of deflation seem to overlook the main dangers posed by a deflationary economy and appear to offer superficial solutions. In this brief, the authors argue that, barring drastic changes in asset and output prices, deflation itself is not the main problem, but rather the recessionary conditions that sometimes give rise to deflation. […] -
AudioInternational Perspectives on Household Wealth
The main focus of this conference was on the distribution of household wealth and savings in the United States and other advanced industrialized countries. Most of the papers highlighted recent trends in wealth inequality in this set of countries during the 1990s. Comparative work on a few less-developed countries was also be presented. Other topics […] -
Working Paper No. 392Understanding Deflation
Deflation can be defined as a falling general price level utilizing one of the common price indices.the consumer price index; the GDP deflator or other, narrower indices as the wholesale price index; or an index of manufactured goods prices. Falling indices of output prices can be the result of several mechanisms: productivity increases, quality increases […] -
Strategic AnalysisDeficits, Debts, and Growth
These are fast-moving times. Two years ago, the Congressional Budget Office (CBO, 2001) projected a federal budget surplus of $172 billion for fiscal year 2003. Within a year, the projected figure had changed to a deficit of $145 billion (CBO 2002). The actual figure, near the end of fiscal year 2003, turned out to be […] -
US teenager’s budgeting analogy is misleading and helps divert attention from the real issues
Copyright 2003 The Financial Times Limited (London, England) Thursday, September 11, 2003; Financial Times; USA Edition; Letters to the Editor Sir, Jagadeesh Gokhale and Kent Smetters (“Americar’s budget bookkeeping scandal,“ September 9) present a highly misleading analogy to highlight US budget accounting. In their analogy, they present US with an 18-year old who earns $2,000 a month, […] -
Wrong policies pulling eurozone economies apart
Copyright 2003 The Financial Times Limited (London, England) Monday, September 8, 2003; Financial Times; USA Edition; Letters to the Editor Sir, Ed Crooks and Tony Major (Comment & Analysis, September 1) are right to question the ability of the eurozone economy to catch up with the US economy. Indeed, they are right to argue that the eurozone […] -
Policy Notes No. 6Is International Growth the Way Out of US Current Account Deficits?
The current account deficit of the United States has been growing steadily as a share of GDP for more than a decade. It is now at an all-time high, over 5 percent of GDP. This steady deterioration has been greeted with an increasing amount of concern (U.S Trade Deficit Review Commission 2000; Brookings Papers 2001; […] -
Policy Notes No. 5
Deflation Worries
For the first time since the 1930s, many worry that the world’s economy faces the prospect of deflation—accompanied by massive job losses—on a global scale. In a rather hopeful sign, policymakers from Euroland to Japan to America all seem to recognize the threat that falling prices pose to markets. Given the singleminded pursuit of deflationary […] -
Working Paper No. 391
Aggregate Demand, Conflict, and Capacity in the Inflationary Process
The dominant view relating to unemployment and inflation is that inflation will be constant at a level of unemployment (the nonaccelerating inflation rate of unemployment, NAIRU) determined on the supply side of the economy (and in the labor market in particular). Further, the economy will tend to converge to (or oscillate around) that level of […] -
Working Paper No. 390
Savings of Entrepreneurs
Previous work on entrepreneurship and wealth has documented that entrepreneurial households are wealthier and have higher wealth mobility. However, the literature has not paid attention to the components of wealth change. Furthermore, endogeneity problems in the measurement of the interaction between saving rates and entrepreneurship are not well addressed.In this paper, by reexamining the relationship […] -
Working Paper No. 389
Do Workers with Low Lifetime Earnings Really Have Low Earnings Every Year?
When it comes to retirement income policy, there is a general perception that workers have full 40-year working careers before retiring. Further, it is generally assumed that workers with low lifetime earnings have low earnings in each year during a normal working career. The basic research question is why do some workers have low lifetime […] -
Working Paper No. 388
Inflation Targeting
Since the early 1990s, a number of countries have adopted Inflation Targeting (IT) in an effort to reduce inflation. Most literature has praised IT as a superior framework of monetary policy. We suggest that IT is a major policy prescription closely associated with the New Consensus Macroeconomics (NCM). Focusing mainly on the IT aspects of […]