The Conquest of American Inflation

The Conquest of American Inflation

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by Thomas J. Sargent
     
 

In the past fifteen years, inflation has been conquered by many advanced countries. History reveals, however, that it has been conquered before and returned. In The Conquest of American Inflation, Thomas J. Sargent presents a groundbreaking analysis of the rise and fall of U.S. inflation after 1960. He examines two broad explanations for the behavior of

Overview

In the past fifteen years, inflation has been conquered by many advanced countries. History reveals, however, that it has been conquered before and returned. In The Conquest of American Inflation, Thomas J. Sargent presents a groundbreaking analysis of the rise and fall of U.S. inflation after 1960. He examines two broad explanations for the behavior of inflation and unemployment in this period: the natural-rate hypothesis joined to the Lucas critique and a more traditional econometric policy evaluation modified to include adaptive expectations and learning. His purpose is not only to determine which is the better account, but also to codify for the benefit of the next generation the economic forces that cause inflation.

Sargent begins with an explanation of how American policymakers increased inflation in the early 1960s by following erroneous assumptions about the exploitability of the Phillips curve—the inverse relationship between inflation and unemployment. In subsequent chapters, he connects a sequence of ideas—self-confirming equilibria, least-squares and other adaptive or recursive learning algorithms, convergence of least-squares learners with self-confirming equilibria, and recurrent dynamics along escape routes from self-confirming equilibria. Sargent synthesizes results from macroeconomics, game theory, control theory, and other fields to extend both adaptive expectations and rational expectations theory, and he compellingly describes postwar inflation in terms of drifting coefficients. He interprets his results in favor of adaptive expectations as the relevant mechanism affecting inflation policy.

Providing an original methodological link between theoretical and policy economics, this book will engender much debate and become an indispensable text for academics, graduate students, and professional economists.

Editorial Reviews

The Times Higher Education Supplement - Peter Sinclair
A lucid, penetrating inquiry into the 'ifs and buts' of rational expectations and their implications for policy. . . . This book illustrates Sargent's great curiosity and honesty . . . A beautifully crafted, deep, and . . . very accessible work. . . . It deserves to be one of the century's most influential books on macroeconomics.
Journal of Economic Literature - Ramon Marimon
A path-breaking contribution. It shows new ways to analyze dynamic economics. It is a basic reference to understand—and develop—dynamic macroeconomic theory in the 21st century.
From the Publisher
"This book illustrates Sargent's great curiosity and honesty. . . . [Here] the reader gets a lucid, penetrating inquiry into the "ifs and buts" of rational expectations (RE) and their implications for policy."—Peter Sinclair, The Times Higher Education Supplement

"A lucid, penetrating inquiry into the 'ifs and buts' of rational expectations and their implications for policy. . . . This book illustrates Sargent's great curiosity and honesty . . . A beautifully crafted, deep, and . . . very accessible work. . . . It deserves to be one of the century's most influential books on macroeconomics."—Peter Sinclair,Times Literary Supplement

"A path-breaking contribution. It shows new ways to analyze dynamic economics. It is a basic reference to understand—and develop—dynamic macroeconomic theory in the 21st century."—Ramon Marimon, Journal of Economic Literature

Times Literary Supplement
A lucid, penetrating inquiry into the 'ifs and buts' of rational expectations and their implications for policy. . . . This book illustrates Sargent's great curiosity and honesty . . . A beautifully crafted, deep, and . . . very accessible work. . . . It deserves to be one of the century's most influential books on macroeconomics.
— Peter Sinclair
Journal of Economic Literature
A path-breaking contribution. It shows new ways to analyze dynamic economics. It is a basic reference to understand—and develop—dynamic macroeconomic theory in the 21st century.
— Ramon Marimon
The Times Higher Education Supplement
This book illustrates Sargent's great curiosity and honesty. . . . [Here] the reader gets a lucid, penetrating inquiry into the "ifs and buts" of rational expectations (RE) and their implications for policy.
— Peter Sinclair
Booknews
Sargent (economics, Stanford U.) provides analysis of the rise and fall of US inflation after 1960, focusing on two broad explanations for the behavior of inflation and unemployment in this period: the natural-rate hypothesis joined to the Lucas critique and a more traditional econometric policy evaluation modified to include adaptive expectations and learning. Annotation c. Book News, Inc., Portland, OR (booknew.com)

Product Details

ISBN-13:
9780691090122
Publisher:
Princeton University Press
Publication date:
11/12/2001
Edition description:
REPRINT
Pages:
168
Product dimensions:
6.06(w) x 9.12(h) x 0.51(d)

What People are saying about this

Robert King
The Conquest of American Inflation is a fascinating document, marshalling sophisticated economic theory and econometrics to the task of explaining the past 50 years of U.S. monetary policy and its interaction with macroconomic activity. It will surely be widely cited and widely discussed.
Robert King, University of Virginia
Cooley
A very deep and very subtle piece of scholarship.... Sargent is most impressive in his ability to bring theoretical arguments to bear on the problem of distinguishing empirically between the two histories of postwar inflation.
Thomas F. Cooley, University of Rochester
David Kreps
A fascinating study of a real-world phenomenon that uses ideas from recent theoretical work on bounded rationality. Brilliant and pathbreaking.
David Kreps, Stanford University
Ben Bernanke
A brilliant technical treatise that includes both new results and original synthesis. . . . The Conquest of American Inflation may help to fashion a new paradigm in macroeconomic analysis.
Ben Bernanke, Princeton University

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The Conquest of American Inflation 1 out of 5 based on 0 ratings. 1 reviews.
Guest More than 1 year ago
This is not a book on economics; it¿s a book about math. After reading this excruciatingly tedious essay, I couldn¿t even guess how good of an economist Dr. Sargent is, but I can tell you that he¿s very, very, very good at math. The book has absolutely zero explanation of the cause of inflation (though the author hints that it might be the Fed, but then again maybe not). The author claims that the reason for inflation seemingly to have gone the way of the dodo bird is that the government is using a magic mathematical formula developed by Dr. Sargent and his mathlete friends. These men, and the books they write, are much like the geeks who have learned to speak Vulcan ¿ the rest of us sitting around dumbfounded. Unfortunately, these math Vulcans tell those in power exactly what they want to hear ¿ that it is possible to manipulate the economy without bringing the whole edifice crashing down on top of our heads. This book is less than useless, except as proof that central planning is alive and well, Soviet Union or no.