日本大哥视频网站:The Great Moderation (3)

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Reaching the Taylor Curve: Improvements in the Effectiveness of Monetary Policy


Monetary policymakers face difficult challenges in their efforts to stabilize the economy. We are uncertain about many aspects of the workings of the economy, including the channels by which the effects of monetary policy are transmitted. We are even uncertain about the current economic situation as economic data are received with a lag, are typically subject to multiple revisions, and in any case can only roughly and partially depict the underlying economic reality. Thus, in practice, monetary policy will never achieve as much reduction in macroeconomic volatility as would be possible if our understanding were more complete.

Nevertheless, a number of economists have argued that monetary policy during the late 1960s and the 1970s was unusually prone to creating volatility, relative to both earlier and later periods (DeLong, 1997; Mayer, 1998; Romer and Romer, 2002). Economic historians have suggested that the relative inefficiency of policy during this period arose because monetary policymakers labored under some important misconceptions about policy and the economy. First, during this period, central bankers seemed to have been excessively optimistic about the ability of activist monetary policies to offset shocks to output and to deliver permanently low levels of unemployment. Second, monetary policymakers appeared to underestimate their own contributions to the inflationary problems of the time, believing instead that inflation was in large part the result of nonmonetary forces. One might say that, in terms of their ability to deliver good macroeconomic outcomes, policymakers suffered from excessive "output optimism" and "inflation pessimism."
The output optimism of the late 1960s and the 1970s had several aspects. First, at least during the early part of that period, many economists and policymakers held the view that policy could exploit a permanent tradeoff between inflation and unemployment, as described by a simple Phillips curve relationship. The idea of a permanent tradeoff opened up the beguiling possibility that, in return for accepting just a bit more inflation, policymakers could deliver a permanently low rate of unemployment. This view is now discredited, of course, on both theoretical and empirical grounds.(这种观点现在已经被质疑: Friedman (1968) provided a major theoretical critique of the idea of a permanent tradeoff. Scholars disagree about when and to what degree U.S. monetary policymakers absorbed the lessons of Friedman's article).Second, estimates of the rate of unemployment that could be sustained without igniting inflation were typically unrealistically low, with a long-term unemployment rate of 4 percent or less often being characterized as a modest and easily attainable objective.10 Third, economists of the time may have been unduly optimistic about the ability of fiscal and monetary policymakers to eliminate short-term fluctuations in output and employment, that is, to "fine-tune" the economy.
What I have called inflation pessimism was the increasing conviction of policymakers in the 1960s and 1970s, as inflation rose and remained stubbornly high, that monetary policy was an ineffective tool for controlling inflation. As emphasized in recent work on the United States and the United Kingdom by Edward Nelson (2004), during this period policymakers became more and more inclined to blame inflation on so-called cost-push shocks rather than on monetary forces. Cost-push shocks, in the paradigm of the time, included diverse factors such as union wage pressures, price increases by oligopolistic firms, and increases in the prices of commodities such as oil and beef brought about by adverse changes in supply conditions. For the purpose of understanding the upward trend in inflation, however, the most salient attribute of cost-push shocks was that they were putatively out of the control of the monetary policymakers.
The combination of output optimism and inflation pessimism during the latter part of the 1960s and the 1970s was a recipe for high volatility in output and inflation--that is, a set of outcomes well away from the efficient frontier represented by the economy's Taylor curve. Notably, the belief in a long-run tradeoff between output and inflation, together with an unrealistically low assessment of the sustainable rate of unemployment, resulted in high inflation but did not deliver the expected payoff in terms of higher output and employment. Moreover, the Fed's periodic attempts to rein in surging inflation led to a pattern of "go-stop" policies, in which swings in policy from ease to tightness contributed to a highly volatile real economy as well as a highly variable inflation rate. Wage-price controls, invoked in the belief that monetary policy was ineffective against cost-push forces, also ultimately proved destabilizing.
Monetary policymakers bemoaned the high rate of inflation in the 1970s but did not fully appreciate their own role in its creation. Ironically, their errors in estimating the natural rate and in ascribing inflation to nonmonetary forces were mutually reinforcing. On the one hand, because unemployment remained well above their over-optimistic estimates of the sustainable rate, they were inclined to attribute inflation to outside forces (such as the actions of firms and unions) rather than to an overheated economy (Romer and Romer, 2002; Nelson, 2004). On the other hand, the view of policymakers that exogenous forces largely drove inflation made it more difficult for them to recognize that their estimate of the sustainable rate of unemployment was too low. Several years passed before policymakers were finally persuaded by the evidence that sustained anti-inflationary monetary policies would actually work (Primiceri, 2003). As you know, these policies were implemented successfully after 1979, beginning under Fed Chairman Volcker.
Better known than even the Taylor curve is John Taylor's famous Taylor rule, a simple equation that has proved remarkably useful as a rule-of-thumb description of monetary policy (Taylor, 1993). In its basic form, the Taylor rule relates the Federal Reserve's policy instrument, the overnight federal funds interest rate, to the deviations of inflation and output from the central bank's desired levels for those variables. Estimates of the Taylor rule for the late 1960s and the 1970s reflect the output optimism and inflation pessimism of the period, in that researchers tend to find a weaker response of the policy rate to inflation and (in some studies) a relatively stronger response to the output gap than in more recent periods.11 As I will shortly discuss further, an insufficiently strong response to inflation let inflation and inflation expectations get out of control and thus added volatility to the economy. At the same time, strong responses to what we understand in retrospect to have been over-optimistic estimates of the output gap created additional instability. As output optimism and inflation pessimism both waned under the force of the data, policy responses became more appropriate and the economy more stable. In this sense, improvements in policymakers' understanding of the economy and the role of monetary policy allowed the economy to move closer to the Taylor curve (or, in terms of Figure 1, to move from point A to point B).