Home » The Role of Policymakers in Business Cycle Fluctuations by Jim Granato
The Role of Policymakers in Business Cycle Fluctuations Jim Granato

The Role of Policymakers in Business Cycle Fluctuations

Jim Granato

Published May 10th 2014
ISBN : 9781280449239
ebook
318 pages
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 About the Book 

The books central theme is that a policymakers role is to enhance the publics ability to co-ordinate their price information, price expectations, and economic activities. This role is fulfilled when policymakers maintain inflation stability.MoreThe books central theme is that a policymakers role is to enhance the publics ability to co-ordinate their price information, price expectations, and economic activities. This role is fulfilled when policymakers maintain inflation stability. Inflation persists less when an implicit or explicit inflation target is met. Granato and Wong argue that inflation persistence is reduced when the public substitutes the prespecified inflation target for past inflation. A by-product of this co-ordination process is greater economic stability. In particular, inflation stability contributes to greater economic output stability, including the potential for the simultaneous reduction of both inflation and output variability - inflation-output co-stabilization (IOCS). Granato and Wong use historical, formal, and applied statistical analysis of business-cycle performance in the United States for the 1960 to 2000 period. They find that during periods when policymakers emphasise inflation stability, inflation uncertainty and persistence were reduced.