Thursday, June 29, 2006

On Arthur Burns

The conventional wisdom is that Arthur Burns was a failure as a central banker. The mysterious knzn, however, questions whecá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r this assessment is right:
for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 12 months ending in February 1970, when Burns began his chairmanship, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 CPI inflation rate was 6.3%. For cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 12 months ending January 1978, when Burns ended his chairmanship, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 rate was 6.7%. On balance, that hardly looks to me like letting inflation get out of hand.....it looks like Johnson’s influence on Martin deserves as much blame for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 subsequent high inflation rates as does Nixon’s influence on Burns.
An intriguing suggestion, but I don't think we can revive Burns's reputation quite so easily.

While Burns was dealt a particularly difficult hand to play (OPEC shocks, productivity slowdown), inflation was not nearly as well contained as cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se numbers suggest. Recall that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Fed influences cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 inflation rate with a lag. Let's suppose that lag is one year, which I believe is roughly consistent with econometric studies. The story cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365n looks very different. By this reckoning, Burns inherited an inflation rate of 5.0 percent (during his first year in office) and left his successor an inflation rate of 9.3 percent (during cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 year after Burns left office). Not a happy legacy for a central banker.