Thursday, October 18, 2018
This article is a small somewhat empirical post-script to my previous article on classical/neo-classical views on inflation and the business cycle. My thesis is straightforward: looking at realised inflation rates is of almost no use for forecasting the business cycle in modern developed economies. I will note that there are disclaimers to that statement, discussed later. If we ignore the disclaimers, the proper forecasting procedure is to first generate a growth forecast, then back out an inflation forecast from the growth forecast. That is, inflation is an outcome, not a causal factor.
Sunday, October 14, 2018
Wednesday, October 10, 2018
Sunday, October 7, 2018
Wednesday, October 3, 2018
This article is an introduction to the post-Keynesian approach to inflation. It is largely based on Section 8.1.1 of Professor Marc Lavoie's Post-Keynesian Economics: New Foundations (link to my review). Similar to the work on stock-flow consistent models, we start out with what is essentially an accounting identity: a statement that is true by definition. We need to understand the implications of the accounting identity before we worry about the behavioural aspects (which are not pinned down with accounting).
(The approach here is quite distinct from conventional approaches; I discussed why post-Keynesians reject conventional inflation theory in an earlier article.)
Sunday, September 30, 2018
Thursday, September 27, 2018
it discussed the reasoning behind the post-Keynesian rejection of mainstream inflation theories. The next article in this series (not guaranteed to be my next article) will be more constructive, as it will outline the inflation theory discussed in Marc Lavoie's Post-Keynesian Economics: New Foundations.However, I realised that there are some apparently simple concepts that can trip us up before we get to Lavoie's explanation: it is a somewhat advanced textbook (senior undergraduate/post-graduate level) and it does not cover points that someone without a economics background might trip up on.