October 10, 2017

The myth of “low inflation” debunked

Yellen and the Fed seem surprised that inflation remains below target even with unemployment at historically low levels. With that view coming from the Fed we get pieces with “novel” titles such as The New Fed Team Will Inherit Inflation Miss That’s Mystifying Yellen Nobody seems to know why there’s no US inflation Even absurdly titled papers as one recently presented by former Board Member Tarullo: Monetary Policy Without a Working Theory of Inflation The list is almost endless… Why is that a concern today? Why wasn´t it a concern in the eleven years from 1994 to 2005. In the… Read More


NGDP Forecast Update: Start of 2018Q4 forecast

We’ve entered the year’s last quarter. This means we abandon the old forecast, and start booking a new vintage: the 2018Q4 forecast. We’re trying to forecast how much nominal income growth there’ll be in one year’s time. It is now Q4 of 2017, thus Q4 of 2018 is the number we seek to hit. The new forecast is coming in only a bit ‘lower’ than the previous vintage. About 4% vs about 4.1% in the old vintage. Keep in mind the gap between in forecast vintages in the plot above, does not imply a change in outlook. It’s simply a… Read More