Why Inflation with a Large Output Gap?
This is a question that observers, particularly those who are skeptical of the aggregate demand-shortfall view, often raise. Ryan Avent and Paul Krugman both answer this question in recent posts. Here is Avent: The answer to the question of why deflation in, say, America hasn’t been sustained despite little progress closing the output gap is [...] View the full post at: Why Inflation with a Large Output Gap? Related posts: Actual Inflation and Inflation Expectations Inflation and the Fed Inflation May Remain Benign, Or it May Not.
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