As Japan's economy sputters and amid worries in the U.S. about inflation, an article in The New York Times wonders if low inflation is a quagmire.
Ford School economics associate professor Joshua Hausman wonders if the Fed can intervene to avoid the stagnation that Japan is experiencing.
“Most economists, me included, are pretty confident that the Fed knows how to bring inflation down,” including by raising interest rates, said Hausman. However, “it’s much less clear, partly because of Japan’s experience, that we’re very good at bringing inflation up,” he added.
