Inflation has been falling over the past year, yet, inconsistent with 'mainstream macro,' unemployment has not increased. What are some of the reasons this could happen?
As long as "inflation" is only considered an attribute of commodities and not of assets (except housing) how can any theory of monetary price inflation make sense?
How did the Phillips Curve become a relationship between all-price inflation when it originally only demonstrated a relationship between wage inflation and unemployment--and explicitly exempted inflation caused by externalities like energy?
Why do economists often rely upon inherently unmeasurable variables such as "expectations (of inflation)," velocity of circulation (of money)", "marginal cost" (of production)"? Is it their utility for propping up other, measurable variables that wouldn't otherwise conform to theory?: "Feather pillows to catch failing theories."
Why is energy specifically omitted from so-called "core" inflation, when every stage of the production of every commodity--extraction, refinement, manufacture, transportation, storage, and sale--requires energy? And if energy were included wouldn't it help to explain why there is a lag between energy prices and CPI inflation? Monetary tightening definitely affects the prices of housing and consumer durable, but it's a heavy weight to raise unemployment on the back to only two sectors of the economy. The triumph of "monetary" tightening is a rain dance that continues until the weather changes. It always works!
It's not rocket science. Spending went up, so Balance went up. NAIRU went up cuz it's correlated with balance. When unemployment fell below NAIRU, inflation rose. Big deficits ended, Balance went down and NAIRU went back down. Inflation begins to fall. See Fig 3 in my current post for details.
As long as "inflation" is only considered an attribute of commodities and not of assets (except housing) how can any theory of monetary price inflation make sense?
How did the Phillips Curve become a relationship between all-price inflation when it originally only demonstrated a relationship between wage inflation and unemployment--and explicitly exempted inflation caused by externalities like energy?
Why do economists often rely upon inherently unmeasurable variables such as "expectations (of inflation)," velocity of circulation (of money)", "marginal cost" (of production)"? Is it their utility for propping up other, measurable variables that wouldn't otherwise conform to theory?: "Feather pillows to catch failing theories."
I appreciate your skepticism!
Why is energy specifically omitted from so-called "core" inflation, when every stage of the production of every commodity--extraction, refinement, manufacture, transportation, storage, and sale--requires energy? And if energy were included wouldn't it help to explain why there is a lag between energy prices and CPI inflation? Monetary tightening definitely affects the prices of housing and consumer durable, but it's a heavy weight to raise unemployment on the back to only two sectors of the economy. The triumph of "monetary" tightening is a rain dance that continues until the weather changes. It always works!
It's not rocket science. Spending went up, so Balance went up. NAIRU went up cuz it's correlated with balance. When unemployment fell below NAIRU, inflation rose. Big deficits ended, Balance went down and NAIRU went back down. Inflation begins to fall. See Fig 3 in my current post for details.