Defensive Expectations
Reinventing the Phillips Curve as a Policy Mix
Authors: Voinea, Liviu
Free Preview- Presents long-run data for 35 OECD countries to formulate analysisWorks with observable variables onlyMakes a fundamental change of paradigm from flow to stockAllows for the Phillips Curve to be time-dependent
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- About this book
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This book explains why inflation remains subdued after recessions, based on three revolutionary concepts: defensive expectations, compensatory savings, and cumulative wage gap. When income falls, consumption falls, and savings rise, as people rebuild their past wealth. Households will not spend more until they fully recover what they lost. The revised Phillips Curve explains that current inflation depends on the cumulative difference between current income and past income.
This new theory is tested and validated by data for US since 1960 to date and for 35 OECD countries from 1990 to date. A number of policy implications are derived from these results. The book calls for an optimal policy mix between monetary policy and fiscal policy; it also discusses the coronavirus crisis as an extreme case of defensive expectations.
- About the authors
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Liviu Voinea is Senior Advisor to the Executive Director and member of the Board of the International Monetary Fund. Prior to that, he was Deputy Governor of the National Bank of Romania (2014-2019), Budget Minister in the Romanian Government (2012-2014) and Deputy Minister of Finance (2012). He is professor of economics at the Bucharest University of Economic Studies. Liviu Voinea received the Romanian Academy Award for Economics.
- Table of contents (5 chapters)
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The Imperative of Adjusting the Phillips Curve
Pages 1-32
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An Alternative Theoretical Framework for Consumption and Saving
Pages 33-72
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Inconvenient Truths
Pages 73-107
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The Cumulative Wage Gap and the Phillips Curve
Pages 109-159
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General Conclusions and Policy Implications
Pages 161-188
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Table of contents (5 chapters)
Bibliographic Information
- Bibliographic Information
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- Book Title
- Defensive Expectations
- Book Subtitle
- Reinventing the Phillips Curve as a Policy Mix
- Authors
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- Liviu Voinea
- Copyright
- 2021
- Publisher
- Palgrave Macmillan
- Copyright Holder
- The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG
- eBook ISBN
- 978-3-030-55045-5
- DOI
- 10.1007/978-3-030-55045-5
- Hardcover ISBN
- 978-3-030-55044-8
- Edition Number
- 1
- Number of Pages
- XXVII, 196
- Number of Illustrations
- 21 b/w illustrations
- Topics
