During the early 1980s, Israel's inflation rate rose to almost 500% per year—one of the highest inflation rates in the developed world. In 1985, the Israeli government implemented a program that immediately reduced inflation to 15%-20%, where it remained for the rest of the decade. How did the economy deal with these major changes so rapidly and successfully? In these eighteen articles, Leonardo Leiderman discusses why the Israeli plan worked and considers how other countries might benefit from similar policies.
Even though standard economic models predict that output will drop and unemployment will rise during disinflation, Israel saw a boom in private consumption and large increases in real wages that lasted for about three years. To understand how the effects of Israeli disinflation policies defied typical expectations, Leiderman investigates how monetary fiscal policy determined Israel's runaway inflation and how the country brought its economy abruptly under control. He finds that rates of inflation and consumption depend on the public's expectations about future fiscal adjustments and that foreign trade shocks do not inevitably lead to a long-term rise in the inflation rate. His illumination of international trade and domestic policies, past and present, will interest academic economists and policymakers alike.
Inflation: Causes and Effects
Edited by Robert E. Hall University of Chicago Press, 1983 Library of Congress HG229.I4512 1982 | Dewey Decimal 332.41
This volume presents the latest thoughts of a brilliant group of young economists on one of the most persistent economic problems facing the United States and the world, inflation. Rather than attempting an encyclopedic effort or offering specific policy recommendations, the contributors have emphasized the diagnosis of problems and the description of events that economists most thoroughly understand. Reflecting a dozen diverse views—many of which challenge established orthodoxy—they illuminate the economic and political processes involved in this important issue.
The previous editions of this work were praised as lucid and insightful introductions to a complicated subject. This third edition incorporates major additions to update the survey while retaining its clarity. Selected from the second edition are essential chapters on developments in balance-of-payments theories, inflation and exchange rates, the international adjustment to the oil price rise, and monetary integration in Europe. In three new chapters, Corden considers the international transmission of economic disturbances, the international macrosystem, and macroeconomic policy coordination.
Inflation, Tax Rules, and Capital Formation brings together fourteen papers that show the importance of the interaction between tax rules and monetary policy. Based on theoretical and empirical research, these papers emphasize the importance of including explicit specifications of the tax system in such study.
The International Transmission of Inflation
Michael R. Darby, James R. Lothian, Arthur E. Gandolfi, Anna J. Schwartz, and Al University of Chicago Press, 1984 Library of Congress HG229.D35 1983 | Dewey Decimal 332.41
Inflation became the dominant economic, social, and political problem of the industrialized West during the 1970s. This book is about how the inflation came to pass and what can be done about it. Certain to provoke controversy, it is a major source of new empirical information and theoretical conclusions concerning the causes of international inflation.
The authors construct a consistent data base of information for eight countries and design a theoretically sound model to test and evaluate competing hypotheses incorporating the most recent theoretical developments. Additional chapters address an impressive variety of issues that complement and corroborate the core of the study. They answer such questions as these: Can countries conduct an independent monetary policy under fixed exchange rates? How closely tied are product prices across countries? How are disturbances transmitted across countries?
The International Transmission of Inflation is an important contribution to international monetary economics in furnishing an invaluable empirical foundation for future investigation and discussion.
The "political business cycle", according to economist William Nordhaus, creates a situation in which political and bureaucratic incentives create artificial economic booms just before elections, with consequent and deleterious side effects after the ballots are counted. This work examines the issue of whether federal governmental structure inevitably leaves the U.S. economy exposed to unhealthy political influences.
Price Index Concepts and Measurement
Edited by W. Erwin Diewert, John Greenlees, and Charles R. Hulten University of Chicago Press, 2009 Library of Congress HC106.3.C714 2009 | Dewey Decimal 338.528
Although inflation is much feared for its negative effects on the economy, how to measure it is a matter of considerable debate that has important implications for interest rates, monetary supply, and investment and spending decisions. Underlying many of these issues is the concept of the Cost-of-Living Index (COLI) and its controversial role as the methodological foundation for the Consumer Price Index (CPI).
Price Index Concepts and Measurements brings together leading experts to address the many questions involved in conceptualizing and measuring inflation. They evaluate the accuracy of COLI, a Cost-of-Goods Index, and a variety of other methodological frameworks as the bases for consumer price construction.
While there is ample evidence that high inflation is harmful, little is known about how best to reduce inflation or how far it should be reduced. In this volume, sixteen distinguished economists analyze the appropriateness of low inflation as a goal for monetary policy and discuss possible strategies for reducing inflation.
Section I discusses the consequences of inflation. These papers analyze inflation's impact on the tax system, labor market flexibility, equilibrium unemployment, and the public's sense of well-being. Section II considers the obstacles facing central bankers in achieving low inflation. These papers study the precision of estimates of equilibrium unemployment, the sources of the high inflation of the 1970s, and the use of non-traditional indicators in policy formation. The papers in section III consider how institutions can be designed to promote successful monetary policy, and the importance of institutions to the performance of policy in the United States, Germany, and other countries.
This timely volume should be read by anyone who studies or conducts monetary policy.
William T. Loomis examines all surviving Athenian wages, salaries, welfare payments and other labor costs to determine what people really were paid for various kinds of work and allowances. These determinations, in turn, enable the author to cast a new and authoritative light on three controversial questions: Was there a "standard wage" in Athens? Were there periods of inflation and deflation? Did Athenians have an "embedded" or a "market" economy?
Individual chapters critically examine each surviving wage or other payment in thirteen job categories, including public office holders; soldiers and sailors; priests, oracles, and seers; overseers, architects, and other salaried construction personnel; and prostitutes and pimps. Three additional chapters then consider whether there was a "standard wage," inflation and deflation in Athens, and the implications of these conclusions for the hotly debated question about the nature of the Athenian economy.
This is the first comprehensive study of Athenian labor and welfare costs since August Böckh's Die Staatshaushaltung der Athener (1886). An updated critical study has been much needed, to take account of the greatly expanded evidence (Aristotle's Constitution of the Athenians, more than a dozen other papyrus texts and hundreds of inscriptions), and the uneven quality of the sources. This collection allows William T. Loomis to argue--contrary to prevailing scholarly opinion--that there never was a "standard wage" at Athens.
"This volume will be a significant contribution to all studies of ancient Greek civilization." --Alan L. Boegehold, Brown University
William Loomis is Visiting Professor of Classics, University of Michigan.