For the first time in four years, I get to teach a course on the Financial System, which is like a financially focused macro course. But lo and behold, Trump’s actions make me re-focus the course…
So, I’m adding “time inconsistency” (Kydland and Prescott, JPE, 1977) and Barro-Gordon (JPE, 1983) to the syllabus.
My slides from last semester on lessons from the issue, here. Concluding graph:
Trump is taking us from near point A to point B, really, really, really fast (lower output for given level of inflation).