See A Trade War Puts Pressure on the Federal Reserve: Lowering interest rates to soften the negative shock risks embedding higher inflation into the economy by Mickey D. Levy and Michael D. Bordo. Excerpt:
"History demonstrates the imprudence of this approach. In the 1970s, the Fed under Chairmen Arthur Burns and G. William Miller followed accommodative monetary policies that served to mitigate the negative economic effects of the 1973 and 1979 oil price shocks. This generated higher inflation and inflationary expectations, which harmed economic and financial performance and proved very costly to purge. By contrast, the central banks of Germany and Switzerland kept monetary policy restrictive during the oil shocks, which constrained inflation and more quickly stabilized their economies."
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.