Week 6 Discussion 1 - Akerlof, Dickens, and Perry offer the...

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According to the article below, getting down to a zero percent inflation my cost more than it is worth. The effects of lowering inflation will include higher unemployment and lost output. The article goes onto say that those in favor of a zero percent inflation would argue that the loss of output and higher unemployment rates would be a small price to pay for zero inflation. I still wonder how they would feel about it if they knew that their job would be among those eliminated in the transition.
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Unformatted text preview: Akerlof, Dickens, and Perry offer the opinion that some inflation is necessary to cover adjustments in wages. Although this argument is controversial it would support the fact that a zero percent inflation is overall not beneficial. Others also are against zero inflation saying that it will not automatically lead to a decrease in prices. I found this article very interesting. Source: http://www.bos.frb.org/economic/nerr/rr1997/winter/hell97_1.htm...
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This note was uploaded on 03/26/2012 for the course ECON GM545 taught by Professor Gotches during the Summer '11 term at Keller Graduate School of Management.

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