tag:blogger.com,1999:blog-5713178645208582139.post4920303421826209383..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: Time to Read "Less Than Zero"David Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-5713178645208582139.post-85182060299714493892011-01-10T15:14:46.460-06:002011-01-10T15:14:46.460-06:00I wonder whether Andy Harless is prepared to pursu...I wonder whether Andy Harless is prepared to pursue his argument to its logical conclusion, for that argument could easily prove in practice to serve, not merely as one for foregoing deflation, but one for tolerating inflation. Suppose, for example, that equilibrium real wage rate growth rates fall within the range of -10%-+10%. Then, according to his argument, we should have enough nominal George Selginnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-70776054381565559572011-01-07T10:41:40.116-06:002011-01-07T10:41:40.116-06:00Andy,
The "grease the wheels" argument ...Andy,<br /><br />The "grease the wheels" argument is premised on money illusion: workers prefer to see nominal wage increases even if real wages are unchanged. But what if nominal wages were relatively stable and the price level was falling as under Selgin's rule? Would folks suffer from such money illusion then? If they saw their wage's purchasing power increase would they David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-28016368025135162152011-01-06T19:48:38.975-06:002011-01-06T19:48:38.975-06:00I think you need to build in a certain amount of n...I think you need to build in a certain amount of nominal wage growth for "greasing the wheels" reasons. That is, since wages in different markets all experience downward rigidity, but relative equilibrium wages are always changing, there are always going to be markets where wages are too high, unless aggregate equilibrium nominal wages are rising sufficiently quickly.<br /><br />This Andy Harlesshttps://www.blogger.com/profile/17582263872850949568noreply@blogger.com