In the past fifteen years, inflation has been conquered by many
advanced countries. History reveals, however, that it has been
conquered before and returned. In The Conquest of American Inflation,
Thomas J. Sargent presents a groundbreaking analysis of the rise and
fall of U.S. inflation after 1960. He examines two broad explanations
for the behavior of inflation and unemployment in this period: the
natural-rate hypothesis joined to the Lucas critique and a more
traditional econometric policy evaluation modified to include adaptive
expectations and learning. His purpose is not only to determine which
is the better account, but also to codify for the benefit of the next
generation the economic forces that cause inflation. Sargent begins
with an explanation of how American policymakers increased inflation
in the early 1960s by following erroneous assumptions about the
exploitability of the Phillips curve--the inverse relationship between
inflation and unemployment. In subsequent chapters, he connects a
sequence of ideas--self-confirming equilibria, least-squares and other
adaptive or recursive learning algorithms, convergence of
least-squares learners with self-confirming equilibria, and recurrent
dynamics along escape routes from self-confirming equilibria. Sargent
synthesizes results from macroeconomics, game theory, control theory,
and other fields to extend both adaptive expectations and rational
expectations theory, and he compellingly describes postwar inflation
in terms of drifting coefficients. He interprets his results in favor
of adaptive expectations as the relevant mechanism affecting inflation
policy. Providing an original methodological link between theoretical
and policy economics, this book will engender much debate and become
an indispensable text for academics, graduate students, and
professional economists.
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Produktdetaljer
ISBN
9780691186689
Publisert
2018
Utgiver
Vendor
Princeton University Press
Språk
Product language
Engelsk
Format
Product format
Digital bok
Forfatter