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Journal Article
Disentangling monetary and fiscal policy
Journal Article
Inflation, real interest tax wedges, and capital formation
William G. Dewald, director of research for the St. Louis Fed, examines how inflation magnifies the distorting effects of taxation when the tax treatment of interest income and expense is not fully indexed to inflation. The distortion involves a real interest tax wedge which is the difference between the real before-tax interest rate that influences fully taxed investors and the real after-tax interest rate that influences savers. Reducing the real tax wedge by eliminating inflation or indexing would stimulate private saving and nonresidential investment but decrease tax receipts and the tax ...
Working Paper
U.S. official forecasts of Group of Seven economic performance, 1976-90
In this paper, we evaluate the accuracy of the U.S. Treasury Department forecasts of real growth and inflation from 1976 to 1990 for the Group of Seven (G-7) economies. The accuracy of these forecasts is measured against the standard of actual real world growth and inflation as subsequently published in the Treasury's World Economic Outlook (WEO). The primary comparison is to forecasts made by the OECD for each of the G-7 nations, but for the United States and Canada, we compare the forecasts to those made by the Blue Chip consensus and the Federal Reserve 'Greenbook'.
Working Paper
The effects of disinflationary policies on monetary velocity
A study of the effect of disinflation policies on monetary velocity, which shows a systematic relation between unexpected changes in the money-income relationship and changes in the trends of inflation rates, and which concludes that the failure to commit to a stable price policy tends to destabilize the economy.
Journal Article
How fast could inflation be eliminated?
Journal Article
Historical U.S. money growth, inflation, and inflation credibility
In this article, William G. Dewald, the retiring Research director at the Federal Reserve Bank of St. Louis, focuses on the longer-term monetary relationships in historical data. He uses charts of 10-year average growth rates in the M2 monetary aggregate, nominal GDP, real GDP, and inflation to show that there is a consistent longer-term correlation between M2 growth, nominal GDP growth, and inflation - but, not between such nominal variables and real GDP growth. The data reveal extremely long cycles in monetary growth and inflation, the most recent of which was the strong upward trend in M2 ...
Journal Article
Real budget deficit implications of Gramm-Rudman-Hollings
An abstract for this article is not available
Journal Article
CBO and OMB projections, adjusted for inflation, show federal budget deficit under control
Federal budget deficits continue to dominate discussions of the short-term economic future of the United States. This article by William G. Dewald stands in stark contrast to the aura of pessimism that pervades most such discussions. Dewalds optimism derives from the inflation adjustment factors he applies to the CBO and OMB deficit projections based on the 1986 Congressional Budget Resolution. He insists that pessimism about deficits stems from a tendency to focus on nominal rather than real (i.e., inflation-adjusted) deficits. Inflation mitigates the burden of a given nominal deficit in two ...
Journal Article
The base money paradox