Economic Nonsense: 11. Inflation is a price worth paying to boost employment

It used to be thought there was a trade-off between inflation and employment.  The economist William Phillips published a 1958 paper in which he found an inverse relationship between money wage changes and unemployment over nearly a century.  The relationship was called the Phillips Curve, and was used by legislators to stimulate the economy by […]

A miracle cure for central bank impotence

Are central banks ever unable to create inflation? The question may seem absurd – why would we ever want them to create more inflation? The typical answer is that deflation can be a lot worse than inflation. But this ignores the fact that prices can fall simply because we can produce things more cheaply. Falling oil prices […]

The ECB is fiddling while Europe burns

If not quite burning yet, the eurozone is kindling. For once, most people agree why: money is very tight. The central bank’s interest rate is low, yes, but this is not a good measure of the stance of monetary policy. What matters is the interest rate relative to the ‘natural’ interest rate – ie, what it would be […]

Inflation drivel

Labour’s economic team—led by Ed Balls—is either confused and economically ignorant, or deliberately misleading and opportunistic. After Tuesday’s inflation release, they hit out at the government for the continued above-target rate (2.7% over the year to September, the same as over the year to August), as part of their new “cost of living” strategy. Spokesperson […]

Why we’re hoping the wisdom of crowds can beat Mark Carney

Today we’ve launched two betting markets to try to use the ‘wisdom of crowds’ to beat government economic forecasters. Here’s the press release we sent out: The Bank of England’s economic forecasts have been wrong again and again. To counter this, the free market Adam Smith Institute is today (Wednesday 28th August) launching two betting […]