308. Economists View

February 17, 2010 § Leave a comment

What really is  such Policy? The big system , right? But this ” macro” leaves out resources on one end, and wealth creation at the other. It is realy set up to Support Bank flows, not real wealth. It in hardly the complete system it implies.

Do We Need to Rethink Macroeconomic Policy?David Altig, research director at the Atlanta Fed and someone Ive found to be very much worth listening to even if I dont always agree, has a dissenting view on adopting a 4% inflation target in order to give central banks more room to maneuver in times of crisis:Do we need to rethink macroeconomic policy?, by David Altig: The aftermath of a crisis is always fertile ground for big thoughts. Big thinking is exactly what we get from Olivier Blanchard the International Monetary Funds director of research and his colleagues Giovanni DellAricca and Paolo Mauro, in their new overview of the financial crisis and what it means for how we think about and, more importantly, practice macroeconomic policy. Titled, appropriately enough, “Rethinking Macroeconomic Policy,” one of the more provocative parts of their analysis was highlighted in the Wall Street Journal:”Central banks may want to target 4% inflation, rather than the 2% target that most central banks now try to achieve, the IMF paper says.”At a 4% inflation rate, Mr. Blanchard says, short-term interest rates in placid economies likely would be around 6% to 7%, giving central bankers far more room to cut rates before they get near zero, after which it is nearly impossible to cut short-term rates further.”

via Economists View.


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