Thomas R. Michl and Kayla M. Oliver
Hysteresis, path dependence, and multiple equilibria are characteristic features of post-Keynesian economics. This paper constructs an otherwise conventional three-equation model that includes a hysteresis-generating mechanism and an invariant output target. We use it to explore the implications for monetary policy of an output-targeting policy framework that seeks to reverse the damage caused by hysteresis. We restrict ourselves to negative aggregate demand shocks and positive inflation shocks that in most instances require a disinflationary response from the central bank. One important finding is that as long as inflation expectations are to some degree anchored, the central bank can achieve its output target after an aggregate demand shock by overshooting its inflation target temporarily and running a ‘high-pressure labor market.’ If expectations are unanchored, an aggregate demand shock will not have long-run hysteresis effects because the central bank is obliged to reflate aggressively, replacing on a cumulative basis all the demand that was lost through the shock. However, with unanchored expectations a pure inflation shock will create hysteresis effects since the central bank will need to disinflate and it does not have the option of running a high-pressure labor market. Anchoring gives the central bank this option, making inflation shocks manageable.
Anna Masutti and Filippo Tomasello
Where law is lawful, decision-makers must comply with the law. If administrative justice is to be achieved in the global space, administrative decision-makers must be committed to ‘legality’, meaning that their decisions are consistent with the existing body of law. A comparative analysis of prevailing functional understandings of administrative justice reveals that it contains a requirement that administrative decisions be made ‘according to law’. Global administrative justice requires cohesiveness, and cohesiveness implies stability, or an anchor to which standards can be tethered. If a requirement for decisions to be made according to law is incorporated into a model of global administrative justice, that anchor becomes the legal framework under which administrative decisions are made. The existing law in the global space, which is defined as international law, domestic law and institutional law, intersects with the United Nations to create legal obligations for its administrative decision-making.