tag:blogger.com,1999:blog-2098432983500045934.post7008743592464422862..comments2024-03-12T22:19:32.339-04:00Comments on The New Arthurian Economics: Inflation and OilThe Arthurianhttp://www.blogger.com/profile/16501331051089400601noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-2098432983500045934.post-64303107370082559912015-10-14T04:41:16.126-04:002015-10-14T04:41:16.126-04:00Jazz: "When I wrote that the Fed didn't s...Jazz: "When I wrote that the Fed didn't set interest rates because the Fed Funds Rate ALWAYS followed and NEVER led the market-based 3 month T-Bill, I got a lot of hoots and hollers, because - EXPECTATIONS!"<br /><br />Here's <a href="http://newmonetarism.blogspot.co.nz/2015/10/what-do-we-know-about-long-and-variable.html" rel="nofollow">Stephen Williamson</a>:<br />"<b>In a world with forward looking people, promises about future actions matter for economic activity today - monetary policy actions need not precede effects.</b>"<br /><br />Of course, that is based on an ergodic assumption and more statistical analysis than the average man can manage:<br />"<b>In principle, the current state of the economy determines the likelihood of all potential future states of the economy. Then, if we know the central bank's policy rule, we know the the likelihood of all future policy actions.</b>"<br /><br />But what the heck.<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-77159071543728849572015-10-07T22:16:14.617-04:002015-10-07T22:16:14.617-04:00Dan -
You raise an interesting point. Is comparin...Dan -<br /><br />You raise an interesting point. Is comparing price to price change valid? My gut feeling is that it is.<br /><br />I like your first graph, though.<br /><br />Your second is a reference to the Phillips curve.<br /><br />http://noahpinionblog.blogspot.com/2011/03/john-taylor-draws-philips-curve.html<br /><br />It's not a simple relationship.<br /><br />Cheers!<br />JzB<br /><br />Jazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-51465365981464217122015-10-07T20:46:45.042-04:002015-10-07T20:46:45.042-04:00The graph you show is funky. 3 quarter center mo...The graph you show is funky. 3 quarter center moving average? Comparing price to % price change?<br /><br />Here's <a href="http://i487.photobucket.com/albums/rr235/mountainmolds/fredgraph_zpsty6kgxrz.jpg" rel="nofollow"> a graph comparing % price change to % price change.</a> Definitely a correlation after OPEC kicked in.<br /><br />You brought up Q2 1961 -- WTF, inflation was very low then? But anyway, prior to OPEC inflation <a href="http://i487.photobucket.com/albums/rr235/mountainmolds/employ_zpsv9ztiema.jpg" rel="nofollow"> correlated to employment </a>(which prolly reflects how close the economy is to capacity). 60's inflation, such as it was, correlated to employment.Dan Lynchhttps://www.blogger.com/profile/11189866002273597534noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-57775067772572609632015-10-07T19:08:24.240-04:002015-10-07T19:08:24.240-04:00Clarida et al: "the initial build-up of infla...Clarida et al: "<b>the initial build-up</b> of inflation in <b>the late 1960s and early 1970s</b> occurs <b>prior</b> to the first oil shock."<br /><br />Nobody is saying oil price hikes didn't contribute to rising prices.<br /><br />Clarida et al are saying it isn't rising oil prices that got inflation going in <a href="http://newarthurianeconomics.blogspot.com/2015/10/calling-halt.html?showComment=1444249077985#c1302730311716756704" rel="nofollow">Q2, 1961</a>.<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-72611027059559468692015-10-07T15:57:43.174-04:002015-10-07T15:57:43.174-04:00When I wrote that the Fed didn't set interest ...When I wrote that the Fed didn't set interest rates because the Fed Funds Rate ALWAYS followed and NEVER led the market-based 3 month T-Bill, I got a lot of hoots and hollers, because - EXPECTATIONS!<br /><br />http://angrybearblog.com/2012/05/who-determines-short-term-interest.html<br /><br />So the idea that A precedes B, but B still causes A is not foreign to deep economic thinkers.<br /><br />But I'm not going to go there, because I still don't believe in intertemporal dislocation.<br /><br />I do think it's striking that in mid 70's and early 80's the inflation spike and the big oil price jump are pretty much concurrent.<br /><br />I'm not impressed with YoY inflation falling faster then oil prices. Once this year's price gets baked in, it's effect on next year's inflation is nil. I think the sharp fall off from the first inflation peak, while oil is at a plateau reflects that.<br /><br />Certainly there were other things influencing inflation throughout the period. In the early 80's, interest rates were sky high and that put a hell of damper on the economy. Which affects activity, which effects oil consumption - so goes the circle.<br /><br />Then in the early 90's, though the detail doesn't line up, both lines broadly rise and then fall together.<br /><br />But this is all out of context. I imagine the authors have some kind of monetarist agenda, and are pushing a viewpoint that makes them want to down-play the role of oil pricing. There might be a component of denialism at play.<br /><br />Cheers!<br />JzBJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.com