... for h. It then presents the proof, which depends on two lemmas. The first recaps the proof of Theorem 11.1.1, but on a Zariski dense open set V₀ only. The second uses smoothness to enable a stronger form of inflation, serving to move into V₀. The chapter also...

... tracked almost perfectly to the inflation rates in Mexico, capturing the volatile economic environment in the country in the aftermath of the peso devaluations between 1976 and 1985. The group also responded to regional events like the coffee crisis in the early 1990s and the earthquake in 1985...

..., and inflation that depends on the structural parameters of the model. These structural parameters characterize agents' preferences, production technologies, and the law of motion of the exogenous shocks. DSGE model real business cycle model decision problem firm price production technology household...

...This chapter explains how, in the wake of the French Revolution's devastating inflation, local, peer-to-peer credit markets recuperated slowly. After such enormous losses, conditions for lending were hardly promising. Worse yet, one of the major revolutionary reforms that would eventually bolster...

...This chapter describes the learning trajectory that led economists and policymakers to regard controlling inflation as a priority and to pursue this goal of greater price stability more effectively. It focuses on one particular episode in the history of macroeconomic controversy—namely, how a set...

...This chapter begins with a review of historical examples that shaped the thinking of economists about the importance for effective monetary policy of understanding the link between inflation and public debt. The threat to monetary policy from high levels of government indebtedness stems from...

...This chapter describes how, since the 1980s, policymakers have managed to reduce and control inflation without unacceptably adverse welfare impacts by changing the monetary policy regime in a way that subjects policy to an external rule. The record in this period suggests that policymakers...

... and without undermining confidence in the future value of money or sustainability of the public finances and debt. However, as the analysis in the book has shown, excess public debt is fraught with future inflation risk. It highlights two characteristics underlying the best thinking about inflation...

...This chapter examines the inflation that rocked a number of industrial nations after World War I. At the end of World War I, all of the principal belligerents had ditched the gold standard. No major country now allowed the free export of gold. It followed that none need now worry lest foreigners...

... that followed the crash. It also explores how bank failures and the fear of bank failures induced deflation and how the Federal Reserve System began open-market operations after harboring fears of inflation. Finally, it looks at the reform of the Federal Reserve System by legislation in 1933, 1934, and 1935...

... was available to be borrowed but that it would be borrowed and would be spent. The chapter considers the experiences of Britain, Germany, and the United States with a lesson of World War II: that general measures for restraining demand do not prevent inflation in an economy that is operating at or near capacity...

... the increasingly serious inflation to the fiscal disorder they had inherited. However, the fiscal position inherited by the Nixon administration was remarkably sound, while the price movements were not especially alarming. The chapter considers Richard M. Nixon's anti-inflation policies, focusing on his initial...

...This chapter examines the decline of Keynesian economics, mainly due to its grave political asymmetry: what was politically possible against deflation and depression was not politically possible or feasible against inflation. Deflation and unemployment called for higher public expenditure and lower...

... by the Franco-German conflict. However, the frame of bourgeois authority and values, the nation-state, was simultaneously weakened by the very interest groups who benefited from a nationalist political atmosphere. The chapter also considers issues relating to inflation, social democracy, and sovereignty...

... simultaneous equations structural parameter Cowles Commission Lucas Critique rational expectations macroeconomics econometric model behavior government policy agent investment decision inflation government deficit The government has strategies. The people have counterstrategies. Ancient Chinese...

... Friedman Milton Sargent Thomas J Wallace Neil Liviatan Nissan Peled Dan Calvo Guillermo A Kydland Finn E Prescott Edward C time consistency chicken credible policy Reaganomics government finance monetary policy fiscal policy economy dynamic game government deficit inflation Reaganomics...

...This chapter examines several dramatic historical experiences that are consistent with the “rational expectations” view but that seem difficult to reconcile with the “momentum” model of inflation. The idea is to identify the measures that successfully brought drastic inflations under control...

...This chapter examines the methods adopted by British Prime Minister Margaret Thatcher and her French counterpart Raymond Poincaré to reduce the rate of inflation. Advocates of the two main groups of contemporary theories about inflation dynamics could have told Mrs. Thatcher that achieving...

... currency. Brazil found its ability to borrow very limited, and therefore had to confront those painful choices immediately. One essay emphasizes that a country's inflation rate at any moment emerges out of the sustained monetary and fiscal policy that it chooses, now and in the future. Brazil Phillips...

... and Wallace (1981), the chapter argues that a responsible fiscal policy makes it easy for a monetary authority to sustain low inflation, whereas a profligate fiscal policy has the opposite effect. Conklin James Fisher Irving Friedman Milton Hansen Lars Peter Kydland Finn E Lucas Robert E Jr Muth John F...