FEDS Paper: The Anatomy of Single-Digit Inflation in the 1960s

Jeremy B. RuddRecently, the experience of the 1960s—when the U.S. inflation rate rose rapidly and persistently over a comparatively short period—has been invoked as a cautionary tale for the present. An analysis of this period indicates that the inflation regime that prevailed in the 1960s was different in several key regards from the one that prevailed on the eve of the pandemic. Hence, there are few useable lessons to be drawn from this experience, save that monetary policymaking remains a difficult undertaking.

FEDS Paper: Who Killed the Phillips Curve? A Murder Mystery

David Ratner and Jae SimIs the Phillips curve dead? If so, who killed it? Conventional wisdom has it that the sound monetary policy since the 1980s not only conquered the Great Inflation, but also buried the Phillips curve itself. This paper provides an alternative explanation: labor market policies that have eroded worker bargaining power might have been the source of the demise of the Phillips curve.

FEDS Paper: Macroeconomic Effects of Capital Tax Rate Changes

Saroj Bhattarai, Jae Won Lee, Woong Yong Park, and Choongryul YangWe study aggregate, distributional, and welfare effects of a permanent reduction in the capital tax rate in a quantitative model with capital-skill complementarity and household heterogeneity. Such a tax reform leads to expansionary long-run aggregate output and investment effects, but those are coupled with increases in wage, consumption, and income inequality.

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