July 25, 2003
Stephen Roach Talks About the Output Gap

Morgan Stanley's Stephen Roach talks about the output gap--how what matters for the changing rate of inflation isn't whether the economy is growing fast, but whether there is a lot of slack in the labor market: Morgan Stanley: Macro certainly has its moments in captivating financial markets. I suspect another one of those moments is now at hand. The debate over deflation has been given a new lease on life by Federal Reserve Governor Ben Bernanke. He has now set the risks of deflation squarely in the context of an "output gap" framework -- long a central tenet of macroeconomic analysis (see his July 23, 2003, speech, "An Unwelcome Fall in Inflation?" available on the Fed’s website). Using this macro construct, Bernanke has concluded that even if the US economy now enters a period of solid recovery, the risks of deflation are going to be with us for some time to come. I couldn’t agree more. Like most concepts in economics, the output gap is a complex restatement of a very simple premise -- the inflationary consequences of disparities between aggregate supply and demand. Alas, what always sounds simple in macro rarely is. Economists attempt to get at the...

Posted by DeLong at 08:03 AM
January 01, 1990
J. Bradford DeLong and Lawrence H. Summers (1990), "Price Level `Flexibility' and the Coming of the New Deal: A Response to Sumner," Cato Journal 9: 1 (Winter), pp. 729-735.

J. Bradford DeLong and Lawrence H. Summers (1990), "Price Level `Flexibility' and the Coming of the New Deal: A Response to Sumner," Cato Journal 9: 1 (Winter), pp. 729-735....

Posted by DeLong at 03:04 PM
September 01, 1989
J. Bradford DeLong (1989), "Facets of Interwar Unemployment," Journal of Monetary Economics 49:3 (September), pp. 800-802.

J. Bradford DeLong (1989), "Facets of Interwar Unemployment," Journal of Monetary Economics 49:3 (September), pp. 800-802....

Posted by DeLong at 02:02 PM
December 01, 1988
J. Bradford DeLong and Lawrence H. Summers (1986), "Is Increased Price Flexibility Stabilizing?" American Economic Review 76: 5 (December), pp. 1031-1044.

J. Bradford DeLong and Lawrence H. Summers (1986), "Is Increased Price Flexibility Stabilizing?" American Economic Review 76: 5 (December), pp. 1031-1044....

Posted by DeLong at 08:49 AM
September 01, 1988
J. Bradford DeLong and Lawrence H. Summers (1988), "How Does Macroeconomic Policy Matter?" Brookings Papers on Economic Activity 1988: 2 (Fall), pp. 433-480.

J. Bradford DeLong and Lawrence H. Summers (1988), "How Does Macroeconomic Policy Matter?" Brookings Papers on Economic Activity 1988: 2 (Fall), pp. 433-480....

Posted by DeLong at 11:48 AM
July 01, 1986
J. Bradford DeLong and Lawrence H. Summers (1986), "The Changing Cyclical Variability of Economic Activity in the United States," in Robert J. Gordon, ed., The American Business Cycle: Continuity and Change (Chicago, IL: University of Chicago Press for the National Bureau of Economic Research), pp. 679-719.

J. Bradford DeLong and Lawrence H. Summers (1986), "The Changing Cyclical Variability of Economic Activity in the United States," in Robert J. Gordon, ed., The American Business Cycle: Continuity and Change (Chicago, IL: University of Chicago Press for the National Bureau of Economic Research), pp. 679-719....

Posted by DeLong at 08:11 AM
J. Bradford DeLong and Lawrence H. Summers (1986), "A Comment on John Taylor's `Improvements in Macroeconomic Stability: The Role of Wages and Prices'," in Robert J. Gordon, ed., The American Business Cycle: Continuity and Change (Chicago, IL: University of Chicago Press for the National Bureau of Economic Research), pp. 667-675.

J. Bradford DeLong and Lawrence H. Summers (1986), "A Comment on John Taylor's `Improvements in Macroeconomic Stability: The Role of Wages and Prices'," in Robert J. Gordon, ed., The American Business Cycle: Continuity and Change (Chicago, IL: University of Chicago Press for the National Bureau of Economic Research), pp. 667-675....

Posted by DeLong at 08:08 AM