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Comments on: Inflation targeting failure: Why inflation targeting? http://www.tvhe.co.nz/2008/06/16/inflation-targeting-failure-what-is-inflation-targeting/ The Visible Hand in Economics Wed, 30 Jul 2008 04:48:49 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: Flexibility and inflation targeting - the RBNZ discussion « The visible hand in economics http://www.tvhe.co.nz/2008/06/16/inflation-targeting-failure-what-is-inflation-targeting/#comment-1559 Wed, 30 Jul 2008 04:48:49 +0000 http://tvhe.wordpress.com/?p=411#comment-1559 […] I have shown myself to be an inflation hawk and passionate lover of inflation targeting (*) (*) – but I am looking forward to hearing the arguments provided in this speech, and will be more than […]

]]> By: Inflation targeting vs inflation trade-offs: What’s the score? « The visible hand in economics http://www.tvhe.co.nz/2008/06/16/inflation-targeting-failure-what-is-inflation-targeting/#comment-1558 Sat, 26 Jul 2008 04:34:50 +0000 http://tvhe.wordpress.com/?p=411#comment-1558 […] have touched on the benefits associated with inflation targeting before here and here. However, now we will try to tie these benefits down amongst the costs and trade-offs […]

]]> By: Mortgage Calculator Currency Conversion Financing http://www.tvhe.co.nz/2008/06/16/inflation-targeting-failure-what-is-inflation-targeting/#comment-1557 Mon, 30 Jun 2008 16:08:33 +0000 http://tvhe.wordpress.com/?p=411#comment-1557 Mortgage Calculator Currency Conversion Financing…

I didn’t agree with you first, but last paragraph makes sense for me…

]]> By: best money market interest rates http://www.tvhe.co.nz/2008/06/16/inflation-targeting-failure-what-is-inflation-targeting/#comment-1556 Sun, 29 Jun 2008 00:57:25 +0000 http://tvhe.wordpress.com/?p=411#comment-1556 best money market interest rates…

After reading this post, I am not sure I understand what you are trying to relate. Please expand on your thoughts a little more. Thanks…

]]> By: Discusssions on how to screw up a terms of trade increase « The visible hand in economics http://www.tvhe.co.nz/2008/06/16/inflation-targeting-failure-what-is-inflation-targeting/#comment-1555 Fri, 20 Jun 2008 02:13:12 +0000 http://tvhe.wordpress.com/?p=411#comment-1555 […] the Bank is allowed to deviate from its target to reduce output volatility in the face of a shock (*) – however the Bank only has this credibility if it settles down and sticks to its target during […]

]]> By: Matt Nolan http://www.tvhe.co.nz/2008/06/16/inflation-targeting-failure-what-is-inflation-targeting/#comment-1554 Mon, 16 Jun 2008 04:49:36 +0000 http://tvhe.wordpress.com/?p=411#comment-1554 “Nonsense.”

If we wish to keep the “general price level” stable it is not nonsense – as an increase in activity with no increase in the supply of money (or the velocity) will lead to a straight reduction in the price level (and some other more important problems in the case of nominal rigidities).

That is why the second part of Friedman’s famous “Inflation is always and everywhere a monetary phenomenon” quote is:

“in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”

“The market interest rate is the ‘price’ for a given form of debt”

This is completely consistent with it being a price for money, after all there is a price in the market for coffee downstairs, one which I pay and one which the cafe receives.

The interest rate defines the opportunity cost of holding money, that is what a price does.

]]> By: Don Lloyd http://www.tvhe.co.nz/2008/06/16/inflation-targeting-failure-what-is-inflation-targeting/#comment-1553 Mon, 16 Jun 2008 04:34:38 +0000 http://tvhe.wordpress.com/?p=411#comment-1553 …The more activity we have in the economy, the more money we require to satisfy these transactions.

Nonsense. Every transaction that involves money places no stress on the supply of money, but merely transfers the ownership of the money purchase price from the buyer to the seller.

…Fundamentally, this provides a supply-demand view of money with nominal interest rates as the price (quantity theory).

Not at all. The market interest rate is the ‘price’ for a given form of debt, government bills for example, that balances supply and demand for that particular form. Government bills are NOT money.

Regards, Don

]]> By: Best Money Websites Guide http://www.tvhe.co.nz/2008/06/16/inflation-targeting-failure-what-is-inflation-targeting/#comment-1552 Mon, 16 Jun 2008 03:30:55 +0000 http://tvhe.wordpress.com/?p=411#comment-1552 Best Websites Guide – Best Search Engines Collection – Best Tools and Widgets.The complete homepage package for the internet users Only on Visitthebest.

]]> By: The Money Elf » Inflation targeting failure: What is inflation targeting? http://www.tvhe.co.nz/2008/06/16/inflation-targeting-failure-what-is-inflation-targeting/#comment-1551 Sun, 15 Jun 2008 23:58:59 +0000 http://tvhe.wordpress.com/?p=411#comment-1551 […] Inflation targeting failure: What is inflation targeting? […]

]]> By: Interest Rates » Inflation targeting failure: What is inflation targeting? http://www.tvhe.co.nz/2008/06/16/inflation-targeting-failure-what-is-inflation-targeting/#comment-1550 Sun, 15 Jun 2008 22:28:19 +0000 http://tvhe.wordpress.com/?p=411#comment-1550 […] Read the rest of this great post here […]

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