Study Results from George Mason University Update Understanding of Investment (Should the Federal Reserve Raise Its Inflation Target?): Investment

2024 OCT 01 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- A new study on Investment is now available. According to news reporting out of Fairfax, Virginia, by NewsRx editors, the research stated, “Standard economic reasoning shows that higher inflation imposes higher tax rates on money balances and unindexed savings, causing financial losses to households and reducing their real incomes.”

Financial support for this research came from Mercatus Center at George Mason University.

Our news journalists obtained a quote from the research from George Mason University, “The leading cases for the Federal Reserve to raise its inflation target-that more inflation better ‘greases the wheels’ of a sticky-price economy, or that it beneficially keeps us farther above the zero lower bound on nominal interest rates-rest on supposed gains from higher inflation that do not plausibly outweigh the losses. The ‘grease’ argument that low inflation reduces real GDP is inconsistent with historical experience under low-inflation regimes.”

According to the news editors, the research concluded: “The argument that the inflation target should be raised to give the Federal Reserve ‘more ammunition’ to fight recessions overlooks effective and less costly methods for conducting counter-recessionary monetary policy, in particular quantitative easing.”

This research has been peer-reviewed.

For more information on this research see: Should the Federal Reserve Raise Its Inflation Target? Southern Economic Journal, 2024. Southern Economic Journal can be contacted at: Wiley, 111 River St, Hoboken 07030-5774, NJ, USA.

Our news journalists report that additional information may be obtained by contacting Lawrence H. White, George Mason University, Fairfax, VA 22030, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1002/soej.12737. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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