“This paper considers inflation forecasts for 2001 under two different assumptions about productivity growth. One assumption, the optimistic one, is that productivity growth has risen above its long-run historical average and that 2001 will see near price stability. The other, the pessimistic one, is that monetary policy itself has been a major factor influencing productivity growth. Accordingly, productivity growth is likely to fall to its long-run historical average and 2001 will see moderate inflation.” Read more.
Monetary Policy in a World of Uncertain Productivity Growth
Robert L. Hetzel
Via the Cato Institute.