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Comment on Rudebusch and Williams, “A wedge in the dual mandate: Monetary policy and long-term unemployment”

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  • Lothian, James R.

Abstract

Rudebusch and Williams (2015) conclude “A wedge in the dual mandate: Monetary policy and long-term unemployment” with the policy prescription “Optimal policy should trade off a transitory period of excessive inflation in order to bring the broader measure of underemployment to normal levels more quickly." The question that I address is whether our knowledge of the dynamics linking monetary policy, inflation and real growth is sufficiently well-developed that policy recommendations of the sort that Rudebusch and Williams proffer can be effective. I present two bodies of empirical evidence pertinent to this issue. The first has to do with the Phillips Curve itself; the second with the class of models now used to analyze the economic effects of monetary policy.

Suggested Citation

  • Lothian, James R., 2016. "Comment on Rudebusch and Williams, “A wedge in the dual mandate: Monetary policy and long-term unemployment”," Journal of Macroeconomics, Elsevier, vol. 47(PA), pages 19-25.
    • Handle: RePEc:eee:jmacro:v:47:y:2016:i:pa:p:19-25
    DOI: 10.1016/j.jmacro.2015.08.006
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    References listed on IDEAS

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    More about this item

    Keywords

    Phillips curve; Inflation; Unemployment; Monetary policy; Taylor curve;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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