Topic: Inflation

Quotes

Michael Bordo & Anna Schwartz, “Monetary Policy Regimes and Economic Performance” (1999)

• The Fisher effect – the correlation between nominal interest rates and expected inflation – is hard to detect before 1914 because inflation was a white noise process whereas, later in the twentieth century, when inflation became more persistent, it became more apparent#

James Buchanan, Public Principles of Public Debt: A Defense and Restatement (1958)

• Instead of serving as a substitute for money creation, debt issue should, fundamentally, be viewed as its opposite. The sale of government securities bearing positive interest returns is necessary only if some reduction in the purchasing power of private individuals and institutions is needed and if the process of sale accomplishes this reduction.#

Roger Garrison, Time and Money: The Macroeconomics of Capital Structure (2001)

• [According to Monetarists, during a monetary expansion] firms perceive the real wage to be falling; workers (initially) perceive it to be rising. . . . To the firm, the “real wage” means the wage rate in comparison to the price of the firm’s output. Changes in this classical, or Ricardian, real wage are not difficult to perceive. To the worker, the “real wage” means the wage rate in comparison to the prices of all the goods and services that the workers buy. Changes in this more neoclassical, or Fisherian, real wage are relatively difficult to perceive.#
• With the direct cash-balance effect in play and the consequent increase in the derived demand for labor, it is not clear that the possible misperception of the real wage has any claim on our attention. Monetarism could easily do without this particular twist.#