me: >> MF...saw a zero inflation rate as an attainable goal at full >> employment (the "natural" rate of unemployment)...
Shane Mage wrote: > Isn't this just a tautology--the "natural" rate of unemployment being > defined as that rate at which there is no endogenous tendency toward > inflation or deflation? Though the NRU is a definition and a theoretical one at that, I don't think MF's theory of inflation as a whole is a tautology. At least for a reasonable short run (a few years), his theory does not fit the data well at all (except in extreme cases). Tautologies can't be contradicted by data. Macroeconomists like R.J. Gordon have tried to make it more tautological, by allowing the value of the NRU to vary over time. But MF seems to have presumed that the "natural" rate was relatively constant (and unique at any one time). Maybe he would have allowed for NRU changes, but a key aspect of his theory was that the NRU represented a supply constraint independent of aggregate demand. -- Jim Devine "All science would be superfluous if the form of appearance of things directly coincided with their essence." -- KM _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
