Nobel Laureate Phelps on Inflation and Fed Policy

The transcript discusses the complex relationship between unemployment and inflation, highlighting the lack of inflation despite low unemployment rates. It explores the impact of the financial crisis on worker behavior and firm anxieties. The discussion extends to central bank policies, questioning the 2% inflation target and the need for interest rate adjustments. The effects of globalization and digitization on productivity and inflation are examined, noting the limited impact of Silicon Valley on the broader economy. Finally, the transcript addresses future economic predictions, potential interest rate hikes, and the implications of tax reforms on deficits.

What does the speaker suggest is necessary to understand the lack of inflation despite low unemployment?

• Relying solely on standard economic theories

• Considering humanistic factors and fears

• Increasing government spending

• Reducing interest rates

What is one reason given for workers not demanding higher wages?

• High inflation rates

• Fear of losing jobs due to past financial crises

• Increased job satisfaction

• Government wage controls

Why are firms hesitant to increase wages, according to the speaker?

• High profit margins

• Lack of competition

• Rapid productivity growth

• High competition from Europe

What does the speaker think about the 2% inflation target?

• It should be decreased to 1%

• It should be increased to 4%

• It should be abandoned

• It is a reasonable target

How does the speaker view the impact of globalization and digitization on productivity?

• They have decreased productivity

• They have had a limited impact on overall productivity

• They have no impact on productivity

• They have significantly increased productivity

What is the speaker's stance on tax cuts for individuals?

• They are necessary for economic growth

• They are going in the wrong direction

• They should be increased

• They have no impact on the economy

What concern does the speaker express about national debt?

• It is manageable with current policies

• It is decreasing rapidly

• It is not a concern for the future

• It will explode if not addressed