Thus, they still face a trade-off between pushing unemployment too low, and setting off an episode of inflation, and not pushing hard enough, resulting in an unnecessary waste of economic resources.
Inflation stays modest, but holding interest rates too low for too long creates excess liquidity, which is now more likely to spill into the prices of homes, shares or other assets than those of goods and services.Measured by the growth in global credit or property prices, the world economy is experiencing a severe episode of inflation.
Recall the worst episode of inflation in U.S. economic history, that of the 1970s and early 1980s.
If you truly want to understand an episode of inflation, you have to ask, "Who's winning from this?" Sometimes your answer will lead you to the conclusion that it's bad and sometimes not.
During this time the Fed grappled with episodes of high inflation, finally tamed by then-chairman Paul Volcker.
Mr Sargent, for instance, studied episodes of high inflation and found that expectations aren't formed quickly but through a slow process of learning.
There can be episodes of rising inflation along the way, however, but these normally reflect special and temporary factors, usually oil prices and/or currency devaluation.
I suspect this is to do with the fact that earlier episodes of high inflation in India occurred in an economy where income per head rose very sluggishly indeed.
Somewhat longer simulation runs were performed by Goodson et al. ([1997], [1999]), Hirose et al. ([1997]), Matt et al. ([2002]) and Küker et al. ([2003]) where several episodes of field inflation and outflows were observed.
If proved, the first detection of these gravity waves emanating from the early universe would add support to the critical cosmic episode of rapid inflation.
Even if you take a global perspective, episodes of really high inflation have become rare.
