[OPE-L:5377] Re: [ALLIN] Re: use-value of money

Allin Cottrell (cottrell@wfu.edu)
Tue, 19 Aug 1997 11:50:48 -0700 (PDT)

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Duncan wrote:

> The problem for me is to understand how central bank policy affects the
> price level, as opposed to the level and rate of growth of output through
> its influence on the expansion of credit (both bank and other.) Are you
> implicitly assuming a Phillips' Curve that links the expansion of the
> economy to the rate of increase of money wages and prices?

Of sorts. The parameters don't have to be stable. I suppose I'm
assuming that the Fed is able (more or less) to engineer the inflation
rate it wants by changing the price and availability of credit -- i.e.
there will generally be _some_ degree of monetary tightening that will
slow inflation, if not immediately then before too long.

Allin Cottrell
Department of Economics
Wake Forest University, NC