Why do we use core inflation

There is a lot of confusion over the Fed's use of core inflation as part of its policy making process. One reason for confusion is that we using a single measure to summarize three different definitions of the term "core inflation" based upon how it is used...more>>

Recession indicators

Many people may not care whether our current situation meets the formal definition of a recession, but as I've explained previously, you should. Here's a summary of how I see the economy at the moment...more>>

The teaching/research trade-off --- never believed it!

Here is a discussion among 4 economists of the teaching/research trade-off....more>>

A Top Economist Writes

It is the nature of journalism, even pieces written by top economists, for the pithy remark to take the place of accuracy or meaning. Here are three examples from an article in The Guardian...more>>

"Re-thinking That ‘70's Inflation Show"

Thomas Palley says "if the union price - wage spiral story of inflation is correct (which it is), Friedman's natural rate theory is wrong. My comments, along with supporting graphs, are at the end:...more>>

Stolper-Samuelson for the real world

The Stolper-Samuelson theorem is a remarkable theorem: it says that in a world with two goods and two factors of production, where specialization remains incomplete (plus a few more technical assumptions), one of the two factors--the one that is "scarce"--must end up worse off as a result of opening up to international trade. Not in relative terms, but in absolute terms. But the theorem is also quite limited in its applicability. It applies only to a case with two goods and two factors, and so its real world relevance is always in question...more>>

Absolutely breathtaking

Brad DeLong is a fine economic historian, but he is also an exceptionally partisan blogger, and today it shows with a fury. DeLong attacks Harvard economist and former Bush and Romney advisor Greg Mankiw. First, Mankiw in the New York Times....more>>

Menu Costs and Phillips Curves: The CalvoPlus Model and Intermediate Inputs

Awhile back, I posted a summary of a paper by Golosov and Lucas. The paper is important because it raises questions about the ability of New Keynesian models to explain fluctuations in real output...more>>