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Re: Interest Rates and inflation



Is not the Phillips Curve a case study for Goodhart's Law?

The story is that Phillips was taken to see Edward Heath, British Prime
Minister  1970-74, and persuaded Heath to use his theory as a basis of
policy. The result was the curve jumped several notches to the right on the
inflation scale.

Most people regard Goodhart's Law as a good joke. I believe it is far more
than that, and feel it is a pity that the rest of Goodhart's work is not as
soundly inspired.

Geoffrey Gardiner

2000/12/28



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