RE: Richard Goodwin

[kurz@xxxxxxxxxxxxxxxxxxxxx]

Dear Rick,
I do not know which meaning Richard Goodwin attached to his statement. In order
to find out you should approach him. However, there is something to be said
about the issue raised from the point of view of the history of economic
thought. Wicksell is frequently interpreted in the way described in your
letter. It is to be noted however that according to Wicksell the central bank
is unable to know in advance what the "natural" rate of interest is. Moreover,
the "natural" rate will change because of technological innovations which are
largely independent of what is done by the money authority. Hence, seen from
this perspective, it is technological change which renders monetary policy an
intrinsically difficult task and which is responsible for cumulative processes.

Best wishes,
Heinz