The myth of how central banks slayed the hydra of inflation
By Kenneth Rogoff
Published: August 30 2006 03:00 | Last updated: August 30 2006 03:00
Central banks' near universal success in bringing down inflation over the past two decades has led many policymakers to conclude that they have pretty much solved the problem of high inflation, once and for all. Market participants have bought into this story, as evinced by a host of quantitative and survey measures. Outside a few developing countries, nobody seems to worry much about a sustained bout of 5 per cent or 6 per cent inflation, much less the double-digit levels of the 1970s. But have central bankers truly slain the hydra of inflation?
The advent of modern independent and anti-inflation-oriented central banks is one of the great success stories of modern economic science. But this story has been exaggerated. We should consider the possibility that the unprecedented pace of modern globalisation, recently emphasised by Ben Bernanke, the Federal Reserve chairman, might also have played a role. If so, what will happen if the winds of globalisation ever reverse course?
Why should globalisation matter for inflation? A very popular but wrong-headed view is that "China exports deflation", so that more rapid growth in China automatically translates into lower inflation everywhere. This is nonsense. As long as a central bank has monopoly control over its currency, as most do, it can set medium and longer term inflation trends at any level it likes. If the central bank really wants to stabilise the country's overall inflation rate, it will respond to lower import prices by allowing an offsetting rise in the prices of domestic goods. In this sense, it would be more accurate to say that China exports inflation rather than deflation.
Instead, one should think of the modern era of rapidly expanding trade and technology progress as providing a spectacularly favourable milieu for monetary policy. With hugely positive underlying trends, central banks have been able to establish and maintain low inflation while delivering growth results that have often outperformed expectations. Rather than face the usual historical trade-off, central banks have let citizens have their cake and eat it. No wonder central bankers have become so popular.
But precisely because globalisation has produced such a steady stream of upward surprises, there is an element of illusion to central banks' success, as most people have only sluggishly adjusted their expectations to the faster growth trends. Consider the ???-performance of Alan Greenspan, the recently retired Fed chairman. Mr Greenspan famously got a number of big calls right, including his early ???-recognition of the productivity boom in the 1990s, as well as his aggressive proactive responses to the tragedy of September 11 2001, the 1998 Russian debt crisis and the 1987 stock market crash. In each of these cases, Mr Greenspan's big call was to slash interest rates and pour liquidity into the system, leading markets to believe that the Fed would always insure the downside of the economy without taking away any of the upside.
But life cannot always be this good for a central bank. If big Fed interest rate surprises are always cuts, markets will eventually catch on, ratcheting up inflationary expectations. Economists Milton Friedman and Ned Phelps elegantly illustrated this point way back in the 1960s. So how was Mr Greenspan able to pull off his long sequence of one-way surprises? Because he did it in an era when continuing upside surprises to underlying growth helped absorb liquidity.
Although not every country has benefited from globalisation as much as the US has, the dynamic has tended to be similar. For example, most of the rich countries have seen spectacular terms-of-trade gains; that is, a fall in the price of imports relative to exports. (Italy and Japan are possible exceptions, as both countries had export niches that were particularly vulnerable to the rise of China and the rest of emerging Asia.) Even in the developing world, which did not necessarily enjoy the same terms-of-trade gains, the move to more market-based economies has brought such efficiency gains that they have still experienced a sharp increase in trend growth. No wonder that central bankers, who are often given credit or blame for long-term growth trends over which they have little impact, have become such big rock stars. What more can one ask for than low inflation and high growth?
There are other more subtle and long-lasting impacts of globalisation on inflation.* These include the impact of greater competition, as well as greater wage and price flexibility, all of which operate to make central banks' commitment to low inflation more credible. But the main story of consistently high underlying real growth explains, more than anything, why globalisation has helped central banks so much. Central bankers deserve credit for taking advantage of these good times to establish and enhance their credibility. I also admit to underplaying the role that better central bank policy has played in creating greater macro???-economic certainty, thereby directly enhancing growth. But central bankers did not create the computer chip, nor did they liberalise China.
So the question is: what happens if the winds of globalisation turn? What if a combination of economic and political problems leads to a sharp slowdown in China? What if security checks in the wake of a terrorist attack lead to a sustained pause in the expansion of global trade? What if a slowdown in trend growth exacerbates the fiscal problems that most countries are already going to face as their populations age? Or, more immediately, what if there is a disorderly unwinding of the oversized US current account deficit? Having built up public expectations about their ability to deliver high growth and low inflation simultaneously, central bankers might have a hard time explaining what went wrong.
Perhaps central banks will get lucky and not have to face any severe problems for another couple of decades but, unfortunately, that is not likely. Thus, there is some urgency in the need for central banks to take greater pains to avoid taking too much credit for upside performance.
Already today, central banks face steeply higher oil prices combined with a pause in falling import prices from developing Asia. But the current conjuncture is just a small test compared with what might happen if globalisation hits a really large bump in the road. Then, at least in a few big countries, inflation will end up being far higher than policymakers or market participants now seem to think possible. Market convictions that inflation is forever dead will be shattered.
* Impact of Globalization on Monetary Policy, by Kenneth Rogoff, August 2006 Jackson Hole Symposium,
www.kc.frb.orgThe writer is professor of economics at Harvard University and former chief economist of the International Monetary Fund
通胀妖魔被收服了吗？
作者：哈佛大学经济学教授肯尼思?罗格夫(Kenneth Rogoff)
2006年9月4日 星期一
在
过去20年中，各国央行在抑制通胀方面几乎全面告捷，这使得许多政策制定者以为，他们几乎彻底解决了高通胀问题。正如很多定量分析和调查数据所显示的那样，市场参与者们已经认可了这个故事。除了少数几个发展中国家，似乎没有人担心会长期出现5%或6%的通胀，更别说上世纪70年代那种动辄两位数水平的高通胀了。但是，中央银行家们真的已经消灭了通胀妖魔吗？
当代这种独立的、反通胀导向型央行的出现，是现代经济学的伟大成功故事之一。但这个故事被夸大了。我们应当考虑一下这样一种可能性：正如美联储(Fed)主席本?伯南克(Ben Bernanke)最近所强调的那样，当代的全球化正以前所未有的步伐向前迈进，而这种全球化步伐，是否可能也在其中发挥了作用？如果答案是肯定的，那么，倘若全球化的“风向”出现逆转，又会发生什么？
为什么全球化会与通胀有关呢？一种非常流行却误导的观点是：“中国出口通缩”，因此，更为快速的中国经济增长，自动转化为各国较低的通胀水平。这纯属无稽之谈。只要一家央行对其货币拥有绝对控制权（多数央行确实如此），它便可以将中期乃至更长期的通胀趋势设定在任意一个它所喜欢的水平上。如果央行真的希望稳定该国总体的通胀率，那么，它会通过允许本土商品价格出现抵消性上涨的方式，来回应进口价格的下降。按照这种逻辑，更准确地说，应当是中国出口了通胀，而非通缩。
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事实上，人们应该看到，当今这个国际贸易快速扩张、科技进步日新月异的时代，为货币政策提供的一个非常有利的环境。乘着极其有利的基本趋势，各家央行有本事保持低通胀水平，同时还带来了屡屡高于预期的经济增长率。高增长与低通胀并没有出现过去常见的那种此消彼长的态势，央行让国民们做到了“鱼和熊掌兼得”。无怪乎如何央行行长们这么受欢迎。
但是，正因为全球化已造就了一个稳定的惊喜源，使得人们对央行成就的认识中存在着一种幻觉，大多数人只是呆板地根据更快的增长趋势调整他们的预期。看看最近退休的美联储前任主席艾伦?格林斯潘(Alan Greenspan)的成就。他曾经正确地做出许多重大判断，并因此名扬天下，其中包括他很早认识到90年代美国生产率增长“提速”，以及大胆地对2001年的9/11悲剧、1998年的俄罗斯债务危机和1987年的股市崩盘做出积极主动的反应。在以上每一个案例中，格林斯潘每次的重大决策都是下调利率，向金融系统倾注流动资金，引导市场相信，美联储总会针对经济下滑的风险提供保险，但不会遏制经济上升势头。
但是，对于一家央行而言，生活不会总是这么美好。如果美联储在利率方面的意外之举总是降息，市场最终会察觉，对通胀的预期也会随之上升。早在60年代，经济学家米尔顿?弗里德曼(Milton Friedman)与内德?费尔普斯(Ned Phelps)就很好地阐明了这一点。那么，格林斯潘怎么会在降息的道路上屡试不爽呢？原因在于，他做出降息决策的那个时代，经济增长不断超越潜在趋势，帮助消化吸收了市场的流动性。
尽管并非所有国家都像美国那样从全球化中获益多多，但格局相似。例如，多数富裕国家在贸易条件方面获得显著收益；也就是说，进口价格相对出口价格出现下降。（意大利和日本可能例外，因为这两个国家的出口特别容易受到中国和亚洲其它新兴经济体崛起的冲击。）即便是那些未必同样得到贸易条件好处的发展中国家，随着它们向市场化程度更高的经济体制过渡，也给它们带来很多效率上的好处，它们的趋势增长率仍得到明显提高。市场往往根据央行行长无法左右的长期经济增长趋势，对他们加以称赞或是怪罪，因此，难怪他们会成为如此耀眼的“巨星”。因为，除了低通胀和高增长以外，市场还能提出什么要求？
此外，全球化对通胀还有一些微妙和长期的影响*，包括更高的竞争程度，以及更高的工资和价格灵活性。所有这些因素加在一起，使得央行致力于低通胀的承诺更为可信。但是，能够解释全球化对央行的帮助为何如此之大的，是持续保持在较高水平的潜在实际增长率，而非其它什么因素。央行官员们利用这些有利时机，确立和提高他们的可信度，这点值得称赞。我也承认更好的央行政策在消除宏观经济的不确定性、进而直接提高经济增长率方面所发挥的作用。但是，央行行长毕竟没有发明电脑芯片，而中国经济开放也与他们无关。
因此，问题在于：如果全球化的“风向”改变，会发生什么情况呢？如果经济和政治问题导致中国经济明显减速，情况会怎样呢？如果恐怖袭击后的安检措施，导致全球贸易扩张势头陷入持续的停顿状态，情况又会如何呢？如果趋势增长放缓，使多数国家即将面临的财政问题（随着其人口老化）进一步恶化，会出现什么情况呢？或者，更加迫在眉睫的是，如果美国的巨额经常账户赤字失控，情况又如何呢？由于他们已经抬高了公众对他们能力的预期，认为他们能够同时实现高增长和低通胀，因此，在出现问题的时候，中央银行家们可能很难作出解释。
或许央行们将非常幸运，在今后二十年内不会面临任何严重问题。但不幸的是，这种可能性很低。因此，对于央行而言，它们迫切需要去做的是，尽更大努力，避免将良好经济表现过多归功于自己。
央行目前已经面临油价急剧上涨的问题，以及来自发展中亚洲国家的进口商品价格下跌势头暂停的问题。但是，与全球化真正遇到大挫折时可能发生的状况相比，目前的危机只是一次小考验。若遇到大挫折，至少在几个大国，通胀率最终将远远高于决策者或市场参与者当前认为可能的水平。有关通胀已经永远消亡的市场信念，将被击得粉碎。
《全球化对货币政策的影响》(Impact of Globalization on Monetary Policy)，肯尼思?罗格夫，2006年8月*，杰克逊霍尔研讨会(Jackson Hole Symposium)，
www.kc.frb.org本文作者是哈佛大学(Harvard University)经济学教授，国际货币基金组织(IMF)前任首席经济学家。
