Book Review: Curing Chronic Inflation and Microeconomic Effects of Monetary Policy

After more than a decade of relatively high inflation, economists remain uncertain and divided about the social cost of non-indexed inflation, the costs of lowering inflation and the benefits of price stability. Both of the books under review take as unchallengeable truth that any monetary and fiscal program to lower inflation involves very high costs in unemployment and lost output. Both consider, and at places advocate, new types of government policies to manage or influence the economy. Both ignore or dismiss all of the work on rational expectations bearing on the costs ending inflation.