By Frank Shostak
Paul Krugman claims that the real factor determining inflation is the rate of unemployment, not increases in the supply of money. As usual, he is wrong.
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By Frank Shostak
Paul Krugman claims that the real factor determining inflation is the rate of unemployment, not increases in the supply of money. As usual, he is wrong.
This argument was used in the 1960s until 1979 stagflation debunked the Philips curve
Incidentally, 1979 is about when Krugman last did good economic work.
this made me lol
It was good work, though.
totally - I almost commented something similar on a different post. The work he won the nobel for is very interesting. Or at least I remember thinking that back when I read it. In general, his work in international economics is much stronger than anything else.
https://www.nobelprize.org/prizes/economic-sciences/2008/krugman/facts
1979 theory on international trade: similar countries produce similar products
It offered a theoretical solution to a well known discrepancy between a well established empirical regularity and the classical trade theory of the time.
Other (better in my opinion) solutions have been developed since, but his work was interesting.
Fascinating history here that I had no idea about! It provides a clear picture of what inflation is and links it to the imagery of dilution that I have always associated with inflation.
I am curious: Krugman and governments often believe an increase in prices is the cause of inflation, rather than the symptom. If the evidence points to monetary expansion as the cause, what evidence they see or claim that allows their short-sidedness to persist?
It's more accurate to say that Krugman and many other contemporaries think inflation is rising prices and can have causes other than monetary expansion.
The original meaning of "inflation" referred to an expanding money supply, which causes price increases.
The answer to your question will depend on whether or not you think they're genuine in their stated beliefs. I believe Paul Krugman is just a highly talented partisan activist and he doesn't actually believe what he's saying. His goal is to justify whatever his side is trying to do, which just so happens to involve printing tons of money. When Republicans are in power he makes completely different arguments. As such, he's just using sophisticated sounding economics jargon that doesn't actually make sense, in order to persuade people that his side's policy makes sense.
Ah, so he in particular is an enemy of the truth in service of whatever cause he's attached to. Can the same be said of the academics holding the position that inflation is rising prices?
That's more due to ignorance of their own discipline's history. They just think that's what the word means.
So according to this logic, we should just dump money into the economy to drum up demand until we've reached employment to the last man. Stimmy checks, anyone?
https://m.stacker.news/19182
That's the modern Paul Krugman, who we all know to just be spectacularly wrong about basically everything.
If inflation can be renamed, then I shall forever refer to him as:
Paul Krukman