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Knut Wicksell - 2 New York CNN — - 1 It’s - 1 Jerome Powell - 1 John Williams - 1 Powell - 1 it’s - 1 catchup - 1
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Search resuls for: "Knut Wicksell"


2 mentions found


☆ 'R-star' is a key tool in the Fed's fight against inflation. But what is it?
  + stars: | 2023-09-24 | by ( Elisabeth Buchwald | ) edition.cnn.com   time to read: +3 min
Both are determined by inflation-adjusted interest rates, which are represented by the variable r in economic models. The interest rate that causes demand for savings to equal demand for investing, is typically denoted as R*. To tame inflation that hit a four-decade high last year, the Fed has been raising interest rates. At the same time, if central bank officials continue to hike rates to get inflation down, they run the risk of overshooting. None of that would be the case at the neutral interest rate.
Persons: New York CNN —, It’s, Jerome Powell, Knut Wicksell, John Williams, Powell, it’s, catchup, we’ve, ” Organizations: New, New York CNN, Federal Reserve, World Bank, New York Fed, Fed Locations: New York, Swedish
☆ The ‘Neutral’ Interest Rate, R-Star, and Other Difficult Economic Numbers - The New York Times
  + stars: | 2023-08-25 | by ( Paul Krugman | ) www.nytimes.com   time to read: +2 min
Yet even though economics lends itself to number-crunching, getting or even defining the numbers we crunch can be problematic. In particular, the Fed would very much like to know how high it needs to keep the interest rate — or more precisely, the interest rate minus expected inflation — to avoid overheating the economy and reigniting inflation. This “natural rate of interest,” a term invented in 1898 by the Swedish economist Knut Wicksell, is often referred to as r* or r-star. Back in 1968, Milton Friedman, in a deliberate echo of Wicksell, argued that there is also a “natural” rate of unemployment consistent with stable inflation. Since referring to any level of unemployment as natural raises some people’s hackles, this is often referred to as the NAIRU, for non-accelerating inflation rate of unemployment — and often denoted as, you guessed it, u*.
Persons: —, John Maynard Keynes, Victoria, Queen Elizabeth —, don’t, Knut Wicksell, Milton Friedman Locations: Swedish
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