Alex Williams
The policy mistake worth worrying about isn’t the speed of taper per se; it's the signal that taper sends about the timing of liftoff in interest rate policy.
“Real wages” are often presented as a neutral measure of the ability of households to buy definite quantities of real goods after adjusting for changes in both prices and wages. In reality, "real wages" explain far less about household economic well-being than these stories confidently imply.
As the year ends, the final three inflation prints are more likely to be on the hotter side of what policymakers are comfortable with, especially due to developments in motor vehicle and air travel prices.
If we are going to take the supply side seriously - something that may have to happen to support the kind of demand-side policy required for maximum employment - we need to get serious about measuring it.
Whenever inflation becomes a part of political or economic discourse, policymakers and commentators instinctively reach for narratives and models drawn from the experience of the 1970s inflation. However, these models offer little explanation for even adjacent experiences of inflation.
Creative approaches to financing investment in public assets and the private sector abound throughout American history. The New Deal, the CARES Act and other legislation have made use of government corporations, equity purchases and loan guarantees to generate durable and appreciating public assets.
Given the Fed’s recent framework revisions and forward guidance commitment to maintain current interest rates until “maximum employment” is achieved, the Fed’s communication with respect to its assessment of “maximum employment” is overdue for a clarification.
Throughout our series on semiconductors, we have used the semiconductor industry to explore big questions in economic theory and industrial policy. Today, we offer a positive account.
This post is the second in a series that uses the history and economics of the American semiconductor industry to ask big picture questions about the future of fiscal policy and industrial policy.
