Unfinished Business in the Macroeconomics of Low Inflation: A Tribute to George and Bill by Bill and George

摘要

In this paper we have completed some unfinished business. We have given an intuitive explanation for why our estimates of the effects of low inflation on unemployment are quite large. We have also justified the reasons for our choice of the parameter responsible for this conclusion. In particular, we have shown how the macro demand for labor will enter the long-run trade-off between inflation and unemployment. And we have further discussed why very low estimates of such a demand for labor can be ignored in assessing the trade-offs between inflation and unemployment.