Less Than Zero: The Case for a Falling Price Level in a

Less Than Zero: The Case for a Falling Price Level in a


Less Than Zero: The Case for a Falling Price Level in a Growing Economy (Iea Hobart Paper, No 132) ➺ [Reading] ➼ Less Than Zero: The Case for a Falling Price Level in a Growing Economy (Iea Hobart Paper, No 132) By George Selgin ➯ – Centrumpowypadkowe.co.uk This book sets out to explain the complexity of why increased production does not that always bring with it lower prices According to the book those who look upon monetary expansion as a way to eradic This book sets out to Zero: The PDF/EPUB ê explain the complexity of why increased production does not that always Less Than Epub / bring with it lower prices According to the book those who look upon monetary expansion as a Than Zero: The PDF Ê way to eradicate almost all unemployment fail to appreciate that persistent unemployment is a non monetary or Than Zero: The Case for Epub / 'natural' economic condition which no mount of monetary medicine can cure Selgin explores the differences between these monetary and natural conditions and proposes solutions of his own.

  • Paperback
  • 82 pages
  • Less Than Zero: The Case for a Falling Price Level in a Growing Economy (Iea Hobart Paper, No 132)
  • George Selgin
  • English
  • 10 November 2016
  • 9780255364027

10 thoughts on “Less Than Zero: The Case for a Falling Price Level in a Growing Economy (Iea Hobart Paper, No 132)

  1. Frank Stein Frank Stein says:

    The title of this book doesn't do it justice Instead of merely being a pitch for gradual deflation this is a lucid clear eyed explanation of why our economy would benefit from switching from a steady inflation target to a constant productivity norm Selgin points out that since the economy in most situations is growing or in other words is becoming productive goods are in reality becoming cheaper most of the time Yet with even a 0% inflation target central banks have to constantly inject money into the economy to undo productivity gains and keep a steady price level This creates real distortions in the signals given by pricesSelgin points out that a decline in the prices of goods provides real information to producers and purchasers It demonstrates how much productivity has changed overall as well as in different markets He compares it to allowing the different dynamic levels of a symphony to express themselves in a recording The goal for a good recording isn't the same steady volume of all instruments throughout but to allow changes in volume to be clearly communicated to the listener The same goes for changes in prices Selgin points out that the problems with inflation targeting are severe in the face of negative supply shocks or negative changes in productivity Here the productivity norm says that central banks should allow price levels to rise higher temporarily and inject money into the economy Say an oil shortage raises prices throughout the economy so real production and productivity shrink To keep inflation steady under an anti inflation regime the government would have to cut back money even leading to falling demand to roll back higher prices Thus the productivity norm price level changes both ways with changes to the economy creating flexibility Selgin also shows that creditors and debtors of fixed money contracts benefit with a productivity norm Since interest rates reflect not just inflation expectations but expectations about economic growth productivity norm price adjustments do eual justice to both sides of a contract If productivity is unexpectedly high debtors have to pay to reflect their better ability to repay If productivity is unexpectedly low however debtors have to pay back less Thus during a recession or depression debtors aren't sueezed excessively for funds they don't have Again the flexibility benefits are enormousAlthough I don't agree with everything in this book I'm less sanguine about the ability of wages to adjust downward this is a great overview of monetary policy and a positive proposal for the future It should be an economics staple

  2. Sean Rosenthal Sean Rosenthal says:

    Interesting uoteUsing monetary policy to stabilise the price level is not at all like making the weather predictableStabilising the price level is like making barometric readings nominal indicators of meteorological conditions predictable while leaving the weather itself as uncertain as everJust as it is desirable for barometer readings to be unpredictable if the weather itself changes randomly it is desirable for the price level a useful 'barometer' of changing unit costs to be unpredictable to the extent that aggregate productivity changes randomly George Selgin Less than Zero

  3. Matthias Görgens Matthias Görgens says:

    I read some other articles by Selgin before I looked into this book specifically to figure out how 'free banking' can stabilise nominal GDP

  4. Tyler Tyler says:

    I almost gave this 4 stars but I feel that would be unfair The only reason that I would have thought to give it 4 stars is because of all the econ jargon It's really unnecessary and prevalent with writers like Keynes That being said Selgin doesn't deserve to be knocked by this because it seems most economists do this This book is not for someone who is new to economics or knows nothing about macroeconomics If you know microeconomics I'd suggest reading some macro before reading this bookSelgin suggests that the zero inflationists are onto something but do not go far enough He suggests that PRODUCTION driven deflation be allowed rather than avoided He suggests that producers are aware of this deflation because that's precisely what they are trying to do All in all great econ book

  5. Mase Mase says:

    An awesome book using mainstream AD AS diagram to show why deflation is not always bad However importantly the author uses words to describe why a market economy should experience steady but expected deflation when prices and interest rates are at their natural or full information levels that is when the price system is allowed to operate The author also offers a way from here to there by advocating a productivity norm in monetary policy The book is not a long read but is packed with info and is very useful in understanding the macroeconomy I highly recommend this book to anyone interested in economics

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