April 2, 2014
In the next portion of his lecture, Lucas looks at the individual economic history of individual countries. A payments system involves many different liquid assets. This, Lucas says, is the basis for a theory of inflation. The goal, he says, is to seek a low average rate. One way to do this is to commit to a constant rate of money growth, which is set to imply a desired inflation rate. A more flexible idea, Lucas explains, is inflation targeting. Lucas points out that central banks around the world who use inflation targeting have had remarkable success at keeping inflation low and stable, even during the crisis of 2008.
The Homer Jones Memorial Lecture Series honors those who exemplify the highest qualities of leadership in economics and public policy. As research director, and later as senior vice president at the St. Louis Fed, Homer Jones (1906-1986) played a major role in developing the Bank as a leader in monetary research and statistics.
For more information about the Homer Jones Memorial Lecture Series, please visit research.stlouisfed.org/conferences/homer/.
The Homer Jones Memorial Lecture Series is sponsored by: