Is the Fed’s Slow Response Making Inflation Worse?
Published September 14, 2022
Traditional economic theory would have the Federal Reserve raise interest rates to lower inflation, which is likely to prompt a recession. However, John Cochrane explains, application of the fiscal theory of inflation may be able to reduce inflation without causing a recession. Cochrane also discusses whether inflation works as a stable or unstable system.
- Why does the interest rate affect inflation?
- How does the fiscal theory of inflation differ from the monetary theory?