Archive for October 1st, 2014

Re-discovering the Phillips curve and it is actually back to life in Europe…

October 1, 2014

Philips Curve showed the trade-off between inflation and unemployment. If you want low unemp, you tolerate high inflation. If you want low inflation, you get higher unemployment. The idea died during 1970s when we had both high inflation and high unemployment making the Philips Curve vertical.

However, old ideas keep coming back. In these interesting times, Europe needs both. Higher inflation and lower unemployment is not really a trade-off. They need both these.

László Andor EU Commissioner for Employment, Social Affairs and Inclusion has this interesting piece revisiting the Philips Curve. There are interesting graphs which show Philips Curve has flattened out in France, Spain and Germany:

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Why is Nouriel Roubini so surprised over surging markets?

October 1, 2014

Well, this has been the story for a very long time. Economic prospects have declined (age of diminishing expectations as Prof Krugman wrote) and continue to decline but markets remain as great as ever. So why is Nouriel Roubini surprised? I mean he even saw this irrationality build-up before the crisis .  This should not be anything new to him…

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Time for helicopter drop of money?

October 1, 2014

Biagio Bossone, Thomas Fazi and Richard Wood say none of the policies are working. We need to look at Friedman (or Bernanke) idea of Helicopter drop of money.

But the traditional Friedman view of central bank directly providing money to people cannot work. We instead need a government helicopter drop:

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How following neoliberal ideas has brought out the worst in people..

October 1, 2014

 of Guardian writes a food for thought piece on following market principles blindly.

By allowing economics to rule all parts of our life, we have actually created many problems along the way.

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