Tuesday, January 13, 2015
A Volta da Productivity Norm?
Artigo interessante de Allister Heath do The Telegraph sobre a productivity norm: It is called the productivity norm and, in my view, is not just the ideal form of monetary policy but also the best way through which to analyse the current drop in inflation. Under the productivity norm, good deflation would be allowed - in other words, price declines caused by improvements to productivity - but also good inflation that helps cushion a reduction in said productivity - for example, inflation would be permitted in the event of the price of oil shooting back up to $120 a barrel. It is a form of nominal GDP targeting, but one which stipulates that the cash value of all the goods and services produced in the economy should rise at the expected growth rate of the factors of production - the amount of people in work and the capital required to make sure that they can operate. In practice, this would mean that nominal GDP would probably grow by around 1pc-1.5pc a year. Under present conditions, prices under the norm would probably be falling by about 1pc a year; at the height of the crisis, they would have risen by 5pc or so.