Na razpravo Roberta Halla na simpoziju Fed prejšnji teden se je odzval tudi The Economist z zahtevo po dvigu inflacije kot rešitvi za spodbuditev gospodarske rasti in znižanje sedanje persistentno visoke nezaposlenosti. Naj spomnim, da Hall predvideva, da bi šele inflacija v višini 4% lahko dovolj znižala realne obrestne mere in spodbudila podjetja k investiranju in zaposlovanju.
Last week central bankers from around the world gathered in Jackson Hole, Wyoming for the Kansas City Fed’s annual economic shindig. Among the papers presented was one by Robert Hall, on “routes into and out of the zero lower bound”. Paul Krugman has a useful write-up in which he describes my sense of the paper perfectly: all over the place, but carrying the promise of big potential insight.
It seems to me that the inflation question is the really critical issue. As Mr Krugman notes, most measures of financial market stress or risk premiums suggest things are mostly back to normal, and yet high unemployment persists. Mr Hall says this could be do to the unusual composition of employment (with many long-term unemployed, for instance), but that feels a bit like adding epicycles to the model. More importantly, the zero lower bound is only a binding constraint because inflation is assumed to be limited to low and stable rates.
And so I think a real problem with the paper is the failure to lay out a rigorous account of the central bank’s reaction function. Mr Hall assumes that central banks are effectively doing all they can:
It’s fairly obvious that monetary policy does not have instruments to restore ZLB economies to their normal conditions, else much more progress back to normal would have occurred.
Yet that raises a critical question: how can we know this? How can we know that even more intervention would not have generated more progress back to normal? Similarly, how can we know that the path of the recovery doesn’t more or less reflect the Fed’s preferences? While we should certainly explore many different stories about the recovery, there is a parsimonious explanation for the economy’s behaviour sitting right in front of us: that inflation has been relatively stable because the Fed has targeted stable inflation, and the Fed’s choice not to raise inflation higher—and thereby reduce the real interest rate further—accounts for continued high unemployment. That should be the null hypothesis, and I’m not sure on what grounds Mr Hall rejects it. We should assume that a central bank with the ability to print money and buy extraordinary quantities of assets and foreign exchange can raise inflation if it wants to.
As Mr Hall acknowledges, the prevailing view of what to do in the face of a liquidity trap—commit to making up lost nominal ground or, as some would have it, “promise to be irresponsible” and allow inflation above target for a time even after unemployment returns to “normal” levels—seems pretty compelling. Perhaps if a central bank actually gave it a try we’d have a better sense of just how many of the questions addressed by Mr Hall actually need to be answered.
Vir: The Economist