Deflation…again

The latest EconTalk podcast is a discussion with Tyler Cowen that centers on monetary theory and policy. While the podcast as a whole is worth a listen, I found myself quite disappointed upon hearing Cowen’s views on deflation. Cowen not only rejects modest deflation as an optimal policy, but actually advocates a low, stable rate of inflation. 

In my view, this largely stems from a misunderstanding of deflation prevalent in monetary theory that I have previously detailed here.  Thankfully, David Beckworth, who has done great worth on the topic of malign versus benign inflation, presents a great counter-point to Cowen’s analysis.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s