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People who had estimated it at 6 percent have since changed their minds; maybe they will again.
REGION: Speaking of unemployment rates and inflationas you suggested, we have been at or under the so-called full employment rate for some time. Or, perhaps, are we simply wrong about what that level is?
Tobin's honors thesis was critical of Keynes, but not so critical as to dismiss entirely.
Indeed, Tobin's affiliation with Keynesian theory has remained steadfast throughout his career.
Their main objectives for monetary policy have been overall macroeconomic performance, and that includes the reduction of unemployment as much as that can be done, and also controlling inflation. I think they look at unemployment numbers as one guide to policy, and inflation numbers as another guide to policy.
They don't say, "We're just going to look at one." Likewise, they don't make monetary policy in terms of some intermediate monetary aggregates; that was very popular in the '70s, until Paul Volcker abandoned the monetary aggregates in 1983.They certainly should, in my opinion, take a pragmatic view of the combination of those goals.I think the current Federal Reserve has done that, under both Volcker and Greenspan.Nobel Prize winner James Tobin has made outstanding contributions to modern macroeconomics.In this final collection of his work he examines the economic policies of the United States and its relations with other major economies after 1990.We have the best record since the 1980s of any G-7 country in terms of macroeconomic policy, and I think that comes from not saying we are for price stability only; rather, it comes from saying we care about what happens to the real economy.As I said, I think the Fed has done very well recently, and I've not been a routine fan of the Fed during my career."I think it still looks pretty good," Tobin says in the following interview, "but I'm prejudiced." Tobin also comments on other economic theories, as well as on monetary policy, the consumer price index, Social Security, his days with the Kennedy administration and how he came to be mentioned in Wouk's novel.you ask the question, "Should policymakers give priority to price stability or to full employment? TOBIN: My response is that they should pay attention to both of those objectives.With low unemployment you have more vacancies and with high unemployment you don't have very many vacanciesusually called a Beveridge curve.That shifted out against us in the '70s and '80s and it seemed to accompany the rise in the apparent NAIRU [nonaccelerating inflation rate of unemployment] from 4 percent in the '50s and 60's to 6 or even more in the late '70s and early '80s. And there are other statistics which give the same answer.