Paul Krugman

@paulkrugman ↗

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Last Checked Oct. 26, 2022

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Mon Oct 10 12:02:02 +0000 2022

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Paul Krugman @paulkrugman

This sorta kinda worked up to the mid-1980s. See the blue lines in this figure from Stock and Watson 5/ https://t.co/kWbXwNFVTj https://t.co/UTPgKSoDGI — PolitiTweet.org

Posted Oct. 10, 2022

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Paul Krugman @paulkrugman

But what determines expectations? Once upon a time, it seemed reasonable to assume that they reflected recent inflation. Simple version would have Inflation = a - b*u + Last year's inflation In which case Change in inflation = a - b*u 4/ — PolitiTweet.org

Posted Oct. 10, 2022

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Paul Krugman @paulkrugman

If you take this seriously, then there is a level of unemployment u* = b/a at which inflation is stable — the NAIRU. To bring inflation down you need a period in which unemployment goes above u* — a period of exceptional suffering. 6/ — PolitiTweet.org

Posted Oct. 10, 2022