The 4th Price of Money and Theories of Inflation

The Price Level and the Inflation Rate

March 2021 - June 2022

In this Webinar Series we will invite scholars to present and discuss different perspectives and theories of the price level inflation.

Webinar Series

Description

The fourth price of money is the price level — the price of money in terms of commodities or goods. We call it the fourth price because Perry Mehrling's Money View tends to emphasize three other prices of money: par, interest rates, and exchange rates.

Getting a handle on inflation — an increase in the price level — has been a challenge for economists across different historical episodes. Today, inflation is again at the forefront of policy debate. While some advanced economies have been struggling to bring inflation back, some emerging economies are still struggling to tame it.

In this Webinar Series we will invite scholars to present different perspectives and theories of inflation. The format consists of a 25-30 minutes presentation of one speaker followed by questions from the audience and discussion.

UPCOMING EVENTS

Online

15 May 2021

Webinar

Rapid Money Supply Growth Does Not Cause Inflation

Monetarists say that inflation is caused by a growth in the money supply—or money stock—by which they mean the amount of money "out there." For his 2016 article, Rapid Money Supply Growth Does Not Cause Inflation, Richard Vague compiled some data that suggest otherwise. He further challenges the idea that inflation is caused either by rapid growth in government debt, by declining interest rates, or by rapid expansion of the central bank's balance sheet. This prompts many questions: What does cause inflation? What has been keeping the price level stable? What can governments and central banks do to cause inflation or prevent deflation? To what extent is it all a matter of degree? If money supply growth had been less rapid than it "needed" to be, would we have seen deflation? Or is money supply simply the wrong variable to look at? How can we know? When central banks are targeting inflation, what can empirical data teach us about the nature of inflation? Does the absence of excess inflation imply that central banks understand how inflation works, or how to prevent it? In this webinar, Richard Vague will be joining us to discuss these, and other questions about inflation and the price level. About the author: Richard Vague is Acting Secretary of Banking and Securities for the Commonwealth of Pennsylvania and serves on the Governing Board of INET. He is the author of A Brief History of Doom, a chronicle of major world financial crises, The Next Economic Disaster, a book with a new approach for predicting and preventing financial crises, and An Illustrated Business History of the United States, forthcoming in May 2021.

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PAST EVENTS

Online

27 Mar 2021

Webinar

Two routes back to the old Phillips curve

The Phillips curve posits a trade-off between inflation and unemployment and has long served as the workhorse model of inflation for most economists and Central Banks. Although the conceptual foundations of this relationship have been a subject of debate, the relationship seemed well-supported by the data for many decades. However, since the 1960s, the slope of the curve (a measure of the responsiveness of inflation to a decline in labor market slack) has diminished significantly. Despite the flattening of the Phillips curve, Blanchard has recently argued that it is still "alive and well." According to Summa and Braga (2020), there are "two routes" to this old Phillips curve: the mainstream route and the conflict-augmented alternative. In this Webinar, we will have a conversation with the authors about these two alternatives:i) the amended mainstream, which considers demand-pull inflation and full incorporation of inflation expectations into money wages and;ii) an alternative non-neoclassical conflict-augmented Phillips curve that assumes no labor scarcity, cost-push inflation, and expectations that are not always fully passed on to nominal wages. The full paper can be found here: https://serialsjournals.com/abstract/42980_4-summa.pdf About the authors: Ricardo Summa is professor of Economics at the Federal University of Rio de Janeiro, Research Fellow at the National Council for scientific and Technological Development (CNPq) and Associate Editor of the Review of Keynesian Economics. Julia Braga is Associate Professor at the Faculty of Economics at Federal Fluminense University (UFF)

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Online

13 Mar 2021

Webinar

Reading Group Recurrent Meeting

Welcome to week one of the Price Level (Fourth Price of Money) discussion and webinar group. We have a weekly standing video meeting time at 9 am Eastern Time (America/New York) every Saturday. For this coming Saturday, March 13th, we will be reading and discussing "Two routes back to the old Phillips curve: the amended mainstream model and the conflict augmented alternative" by Ricardo Summa and Julia Braga https://serialsjournals.com/abstract/42980_4-summa.pdf The following week, we are hoping to have one of the authors with us for a webinar to talk about the paper and answer questions. We also have a Discord server for ongoing discussion: https://discord.gg/yD8psxqe3x

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Online

20 Mar 2021

Webinar

Reading Group Recurring Meeting

Welcome to week two of the Price Level (Fourth Price of Money) discussion and webinar group. Our weekly standing video meeting time is 9 am Eastern Time (America/New York) every Saturday. For Saturday, March 20th, we will be continuing our discussion of "Two routes back to the old Phillips curve: the amended mainstream model and the conflict augmented alternative" by Ricardo Summa and Julia Braga https://serialsjournals.com/abstract/42980_4-summa.pdf On March 27th at 10 am Eastern time, the authors will join us for a webinar. See our Discord server for ongoing discussion: https://discord.gg/yD8psxqe3x

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Online

17 Apr 2021

Webinar

The Great Demographic Reversal with Charles Goodhart and Manoj Pradhan

Are we heading into a future with higher inflation, higher interest rates and less inequality? That is what Charles Goodhart and Manoj Pradhan propose in their book 'The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival'. Goodhart and Pradhan propose that the underlying forces of demography and globalisation will shortly reverse multi-decade global trends of lower inflation, lower interest rates, and more inequality. “Whatever the future holds”, the authors argue, “it will be nothing like the past”. Deflationary headwinds over the last three decades have been primarily due to an enormous surge in the world’s available labour supply, owing to very favourable demographic trends and the entry of China and Eastern Europe into the world’s trading system. This book demonstrates how these demographic trends are on the point of reversing sharply, coinciding with a retreat from globalisation. The result? Ageing can be expected to raise inflation and interest rates, bringing a slew of problems for an over-indebted world economy, but is also anticipated to increase the share of labour, so that inequality falls. This webinar is a conversation with the authors about their book, their claims, and their theory of the price level and inflation. About the authors: Charles Goodhart is Emeritus Professor of Banking and Finance at the London School of Economics. Charles previously was a monetary economist at the Bank of England, becoming a Chief Adviser in 1980. Manoj Pradhan is the founder of Talking Heads Macro, an independent macroeconomic research firm. Manoj was previously Managing Director at Morgan Stanley and led the Global Economics team there.

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Online

10 Apr 2021

Webinar

Reading Group Recurring Meeting

This week, we're discussing chapter 5 of "The Great Demographic Reversal" by Charles Goodhart and Manoj Pradhan. The title of the chapter is: "The Resurgence of Inflation." Our weekly standing video meeting time is 9 am Eastern Time (America/New York) every Saturday. On April 17th at 12 am Eastern time, the authors will join us for a webinar. See our Discord server for ongoing discussion: https://discord.gg/yD8psxqe3x

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Online

24 Apr 2021

Webinar

Reading Group Recurring Meeting

The price level is the average price of goods in terms of money. As Perry Mehrling's money view emphasizes, the price level also describes the price of money in terms of goods. But what forces lie behind behind the determination of the price level? This week, we will discuss a recent paper by Lance Taylor and Nelson H. Barbosa-Filho entitled "Inflation? It’s Import Prices and the Labor Share" The paper provides a brief summary of US inflation history, along with a survey of theories used to explain it. The authors conclude that changes to the labor share of output, along with input prices, are main drivers of inflation. If labor share and import prices are indeed the primary drivers of inflation, then why is this true? Under what conditions would it cease to be true? Our weekly standing video meeting time is 9 am Eastern Time (America/New York) every Saturday. See our Discord server for ongoing discussion: https://discord.gg/YKHZJR8sKc

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Online

1 May 2021

Webinar

Inflation? It’s Import Prices and the Labor Share!

In their recent Working Paper Inflation? It’s Import Prices and the Labor Share! Lance Taylor and Nelson Barbosa argue that inflation should be analyzed as a dynamical macroeconomic process instead of the micro-oriented approach used by monetarist analysis. After a critical presentation of the Phillips Curve and inflation targeting history, the authors build on contemporary structuralist theory and on an empirical exercise using a VEC model to discuss the challenges for the Biden administration. According to the authors, conflicting claims to income are the underlying source of inflationary pressure. Import costs and policy repercussions complicate the picture. Still, the empirical results suggest that money wages would have to grow one percentage point per year faster than prices plus productivity for several years if the Fed is to meet a three percent inflation target. In this Webinar, we will have a conversation with the authors about the theory, their results, and the policy options and challenges. Link for the WP: https://www.ineteconomics.org/uploads/papers/WP_145-Taylor-and-Barbosa-Filho-Inflation.pdf About the authors: Lance Taylor received a Ph.D. in Economics from Harvard University in 1968. He has been a professor in the economics departments of Harvard and the Massachusetts Institute of Technology, the New School for Social Research, among other research institutions. He has published widely in the areas of macroeconomics, development economics, and economic theory. Nelson Barbosa holds a Ph.D. in Economics from the New School for Social Research and is currently a Professor at FGV and the University of Brasilia. He has also worked as an economic analyst at the Brazilian Central Bank and, from 2006 through 2013, he was part of the senior economic staff at the Brazilian Ministry of Finance, first as Secretary of Economic Monitoring (2007-08), and later as Secretary of Economic Policy (2009-10) and Deputy Finance Minister (2011-13).

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Online

8 May 2021

Webinar

Reading Group Recurring Meeting

The price level is the average price of goods in terms of money. As Perry Mehrling's money view emphasizes, the price level also implies a price of money in terms of goods. But what determines the price level? Why is the price level important? And how does the price level fit into the rest of the money view? This week, we will discuss a 2016 article by Richard Vague entitled "Rapid Money Supply Growth Does Not Cause Inflation." https://www.ineteconomics.org/perspectives/blog/rapid-money-supply-growth-does-not-cause-inflation He also says, "Neither do rapid growth in government debt, declining interest rates, or rapid increases in a central bank’s balance sheet." Is Vague right? If none of those things cause inflation, then what does cause inflation. Or, more importantly what kinds of forces prevent inflation and keep the price level stable? Our weekly standing video meeting time is 9 am Eastern Time (America/New York) every Saturday. See our Discord server for ongoing discussion: https://discord.gg/YKHZJR8sKc

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Working groups
  • Financial Stability
Project Organizers
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Nathalie Marins

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Alex Howlett

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Mateusz Urban

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Jay Pocklington

For questions, the Project Organizers.

YSI Webinar

The Great Demographic Reversal with Charles Goodhart and Manoj Pradhan

April 17 2021, 16:00

Are we heading into a future with higher inflation, higher interest rates and less inequality?

That is what Charles Goodhart and Manoj Pradhan propose in their book 'The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival'. Goodhart and Pradhan propose that the underlying forces of demography and globalisation will shortly reverse multi-decade global trends of lower inflation, lower interest rates, and more inequality.

“Whatever the future holds”, the authors argue, “it will be nothing like the past”. Deflationary headwinds over the last three decades have been primarily due to an enormous surge in the world’s available labour supply, owing to very favourable demographic trends and the entry of China and Eastern Europe into the world’s trading system. This book demonstrates how these demographic trends are on the point of reversing sharply, coinciding with a retreat from globalisation. The result? Ageing can be expected to raise inflation and interest rates, bringing a slew of problems for an over-indebted world economy, but is also anticipated to increase the share of labour, so that inequality falls.

This webinar is a conversation with the authors about their book, their claims, and their theory of the price level and inflation.

About the authors:

Charles Goodhart is Emeritus Professor of Banking and Finance at the London School of Economics. Charles previously was a monetary economist at the Bank of England, becoming a Chief Adviser in 1980.

Manoj Pradhan is the founder of Talking Heads Macro, an independent macroeconomic research firm. Manoj was previously Managing Director at Morgan Stanley and led the Global Economics team there.

Recording

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Time & Date

Start: April 17 2021, 16:00*

Duration: 60 minutes

*Time is displayed in your local time zone (Africa/Abidjan).

Presenters
External Presenter

Charles Goodhart

Prof. Emeritus - London School of Economics

External Presenter

Manoj Pradhan

Founder of the research firm Talking Heads Macro

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Join us for a Webinar!

Topic: The Great Demographic Reversal with Charles Goodhart and Manoj Pradhan

Time: April 17 2021, 16:00 (Timezone: Africa/Abidjan)

Join from PC, Mac, Linux, iOS or Android: https://ysi.ineteconomics.org/project/6045416b252c4204141d7be0/event/6053541c9acd5704d392efc9