the holy grail

mariaalice

Has any economy achieved the holy grail of low inflation, low unemployment AND
high growth!

and whats your opinion of how this could be achieved?

Économiste Monétaire

That would depend on how one defines "low." Low relative to history? Low relative to other countries? Low relative to an arbitrary figure?

mariaalice

anything under 5% unemployment ( in modern western capitalist society ) is considered full employment ..so as low as that ...then maybe 2% inflation ... The point im making ...is there always a trade off between full employment and inflation.....

Économiste Monétaire

Well, a natural rate of unemployment (full employment) is different in each Western country, depending on the nuances of each labour market. But there is a trade off between a boom and inflation eventually (at least in the short to medium-run), capacity constraints come through in some manner, prices rise. Keeping at a steady rate of growth of around 3-4% (natural growth rate) shouldn't really be a problem for inflation, depending on the country. It's when you get quite high positive output gaps that inflationary pressures come through.

How it could be achieved? Let's give supply side economics dogma another shot... Really worked out well for Reagan, not so much for Bush senior hehe.

silverharp

mariaalice wrote: »

... The point im making ...is there always a trade off between full employment and inflation.....

be careful of cause and effect here implying a trade off assumes one causes the other, I dont believe there is a causality. The view is bandied about but I dont think there is any consensus on it.