Robert Eisner

Robert Eisner is William R. Kenan Professor of Economics, Emeritus, at Northwestern University. His latest book is
The Great Deficit Scares: The Federal Budget, Trade and Social Security. A new work, Social Security: More, Not Less, will be published by the Twentieth Century Fund in 1998.

Recent Articles

Our NAIRU Limit: The Governing Myth of Economic Policy

It's now a familiar story: The Fed raises interest rates to slow the economy. But new research suggests that we are needlessly sacrificing prosperity on the altar of false economic assumptions.

W e mustn't have it too good. Too much growth too little unemployment is a bad thing. These are not the idle thoughts of economic nail-biters; they are the economic policy of the United States. After real growth of gross domestic product (GDP) hit 4.5 percent in the last quarter of 1994 and unemployment dipped to 5.4 percent in December, the Federal Reserve moved on February 1 to raise interest rates for the seventh time in less than a year. Why? To slow our too rapid rate of growth and stop or reverse the fall in unemployment. Why do that? To fight inflation. Ordinary people may wonder. Overall inflation, as measured by the GDP implicit price deflator, was down to 2.1 percent, its lowest in three decades. The Consumer Price Index rose only 2.7 percent in 1994 and knowledgeable analysts, including the Fed's chairman, AlanGreenspan, recognize that this measure overstates the rise in consumer costs, perhaps by as much as two percentage points. Hard-nosed economic analysts and business...