Today's global economy, with most developed nations experiencing
very low inflation, seems a world apart from the "Great Inflation"
that spanned the late 1960s to early 1980s. Yet, in this book,
Brigitte Granville makes the case that monetary economists and
policymakers need to keep the lessons learned during that period
very much in mind, lest we return to them by making the same
mistakes we made in the past.
Granville details the advances in macroeconomic thinking that
gave rise to the "Great Moderation"--a period of stable inflation
and economic growth, which lasted from the mid-1980s through the
most recent financial crisis. She makes the case that the central
banks' management of monetary policy--hinging on expectations and
credibility--brought about this period of stability, and traces the
roots of this success back to the eighteenth-century foundations of
modern monetary thought.
Tackling fundamental questions such as the causes of inflation
and its relation to unemployment and growth, the natural rate of
inflation hypothesis, the fiscal theory of the price level, and the
proper goals of central banks, the book aims above all to
demonstrate the dangers of forgetting the role of credibility in
establishing sound monetary policy. With the lessons of the past
firmly in mind, Granville presents stimulating ideas and proposals
about inflation-targeting principles, which provide tools for
present-day monetary authorities dealing with the forces of
globalization, mercantilism, and reserve accumulation.
Subjects: Finance, Political Science, Economics, Business
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