Trade Inflation for More Jobs

Analysis: Higher inflation is the key adding jobs
If an economic model presented at the American Economic Association's annual meeting is correct, the Federal Reserve is on the right track in boosting inflation to bring down unemployment, according to The Economist. The model concluded that a real interest rate of -2.5% would get the labor market on its feet. If the central bank can get inflation up to 2.5% and hold the nominal interest rate at 0%, which is pretty much where it is now, the real interest rate will, in fact, be -2.5%. "The Fed is the answer to the problem; it needs to get off its butt and create rising inflation expectations," the magazine noted. The Economist/Free Exchange blog (09 Jan.)