One claim that I often hear around the blogs and tweets is that the US could never default because it borrows in its own currency. Greece defaulted because it borrows in Euros, and other EU countries have strong objections to the ECB printing money to pay off Greece’s debts. However, when the US debt comes [...]
Tags: default, Greece, inflation, sovereign debt crisis, United States of America
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Tyler has been defending his stagnation hypothesis with an intuitive argument about when the CPI is most skewed. I’m not 100% persuaded of Tyler’s intuition. There is a severe conceptual problem that plagues any measure of inflation. It seems easy enough to measure the change in price of a basket of goods, but real-life consumers [...]
Tags: Cowen, CPI bias, inflation, The Great Stagnation
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Arnold Kling tentatively postulates that central banks can, at most, select between a low-stable inflation regime and a high-variable inflation regime. Bryan Caplan proposes a quick test, which I hereby supply. Below are some scatterplots of inflation variance versus inflation means for 176 countries. The data is from the World Bank, which gets it from [...]
Tags: Caplan, IMF, inflation, Kling, monetary policy, World Bank
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