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Higher interest rates cannot durably lower inflation without a fiscal tightening to pay interest costs on the debt.
Drawn from what John H. Cochrane said
What John H. Cochrane actually said
- John H. Cochrane Economist at the Hoover Institution
In “expectations and the neutrality of interest rates” I show that even in an old-Keynesian adaptive expectations model, that otherwise well captures standard doctrines, higher interest rates cannot durably lower inflation without a fiscal tightening to pay interest costs on the debt.
Added to korrents 19 Oct 2026 · How quotes work · Something wrong? Tell us
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