Well, that may be why Meyer is taking the position that he is. But, is it not the case that there is now a rather large literature out there that suggests that the NAIRU, if it exists, is not exogenous, and may get lowered as the rate of unemployment gets lowered due to resulting changes in the labor market (more experience by new workers, etc.)? Indeed, the decline in the unemployment rate has been fairly gradual. No "sudden change" in the NAIRU is necessary for a return to the conditions of the early 1960s to have taken place. Barkley Rosser On Mon, 11 May 1998 15:59:33 -0700 Brad De Long <delong at econ.Berkeley.EDU> wrote:
> >Brad De Long wrote:
> >
> >> Larry Meyer
> >
> >Meyer seems to be the leader of the hawk faction in the Fed - what's his
> >story?
> >
> >Doug
>
> My guess is that he has an extraordinary amount of faith in his macro mode,
> that his macro model contains an accelerationist Phillips curve, and that
> his macro model does not allow for sudden large declines in the
> non-accelerating-inflation-rate-of-unemployment.
>
> Thus my guess is that he believes that "special factors" (the squeeze on
> health care costs as firms move more people in HMOs, the accelerated fall
> in computer prices over the past two years, the stronger dollar with
> declining import prices, and just plain luck) have been masking
> inflationary pressure over the past two years--and that we are about to see
> inflation start rising by one percent per year every year, unless the
> unemployment rate creeps up to 5.5% or higher...
>
> I think there are two chances in three that he is right...
>
>
> Brad DeLong
>
>
>
-- Rosser Jr, John Barkley rosserjb at jmu.edu