Jan
23

Inflating Inflation

With short-term interest rates near zero and inflation very mild, real short-term interest rates (nominal interest rates minus the inflation rate) are slightly negative. To boost investment spending and the economy, the Fed should push real interest rates further into negative territory. Thus, rather than promising to keep interest where they are until unemployment falls to say 6%, explicitly announce a higher inflation target of 3%, not 2%.

Share This Post
Facebook Twitter Email

Speak Your Mind

*