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As bad as Arthur Burns?

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11/02/2005
We don't have to share the mumbo-jumbo mathematical methodology to take a delight in the verdict of Robert Gordon on the Greenspan Legacy:- "Perhaps the most surprising result in this paper is that, when monetary policy is assessed solely in terms of alternative Taylor rule reaction functions and their effect, there was no difference between the ‘Greenspan' monetary policy in effect in 1990–2004 and the ‘Burns' reaction coefficients in effect in 1960–79. Only the ‘Volcker' reaction coefficients in effect during 1979–90 represented a substantial departure." "Previous impressions that the Greenspan reaction function represented a desirable combination of aggressive fighting against both inflation and the output gap are based on statistical estimates plagued by positive serial correlation. When a serial correlation correction is applied, the Greenspan reaction to inflation drops from an inflation-fighting value well above unity to an inflation-accommodation value well below unity, and is little different from the Burns-era coefficient."

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