Thursday, February 6, 2014
Phillips curve, RIP
From February 6 Wall Street Journal. So much macro discussion presumes that inflation is always and everywhere driven by booming economies, it's worth remembering rather striking contrary evidence.
I'm looking for a good graphic, but this last week's failure of emerging market central banks to put a dent in their currencies by raising interest rates is also an important reminder of the limits of monetary policy. As surely Argentina's and Venezuela's troubles are beyond anything a central bank can fix by any finite interest rate.