Inflation, not yet

Is inflation the answer? - Paul Krugman Blog - NYTimes.com

Is inflation the answer?

Greg Mankiw says yes. Since that was the answer I arrived at for Japan more than a decade ago, I have to say that it makes sense in principle.

But here’s why it won’t work now, at least not yet: we’re talking about making a credible commitment to fairly high inflation over the medium term, yet you still have distinguished central bankers appalled at the Fed’s 2 percent inflation target.

And again, the inflation commitment has to be credible. So I don’t think we’re ready for this, not yet.

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