Defensive Expectations, 1st ed. 2021 Reinventing the Phillips Curve as a Policy Mix
Auteur : Voinea Liviu
This book explains why inflation remains subdued after recessions, based on three revolutionary concepts: defensive expectations, compensatory savings, and cumulative wage gap. When income falls, consumption falls, and savings rise, as people rebuild their past wealth. Households will not spend more until they fully recover what they lost. The revised Phillips Curve explains that current inflation depends on the cumulative difference between current income and past income.
This new theory is tested and validated by data for US since 1960 to date and for 35 OECD countries from 1990 to date. A number of policy implications are derived from these results. The book calls for an optimal policy mix between monetary policy and fiscal policy; it also discusses the coronavirus crisis as an extreme case of defensive expectations.
1. The Phillips Curve: what went wrong.- 2. An alternative theory of consumption.- 3. The post-crisis Phillips Curve: cumulative wage gap vs. inflation gap.- 4. Empirical evidence.- 5. Policy implications.
Date de parution : 12-2021
Ouvrage de 196 p.
14.8x21 cm
Date de parution : 12-2020
Ouvrage de 196 p.
14.8x21 cm
Thèmes de Defensive Expectations :
Mots-clés :
wage; inflation; Phillips Curve; monetary policy; global financial crisis; consumption theory; austerity