The very sharp Nick Rowe has a useful piece today giving the baby-step intuition behind Schmidt and Woodford’s argument that, no, expected and actual inflation do not as a rule decline one-for-one when a central bank lowers nominal interest rates: Nick Rowe: Understanding Schmidt and Woodford on Neo-Fisherianism: “Suppose you are really bad at algebra… … Continue reading Stability of General Equilibrium and Monetary Policy: Baby Steps