Larry Ball's interpretation of New Zealand is that it is a victim of
intensive monetarism: that as you look across the OECD, the more
aggressive the fight against inflation was, the longer it was
pursued, the the feebler were the stimulative policies of the late
1980s, the greater was the damage done to the employment system and
the worse was subsequent macroeconomic performance.
He tends to arrange the OECD countries along a spectrum from the
United States (where the Volcker disinflation was--in OECD-wide
context--not that bad, and was followed by rapid interest rate
reductions from 1982 on and by the enormous short-run fiscal stimulus
of the Reagan deficits) which has managed to reap nearly all the
potential gains from central-bank credibility without suffering the
permanent rises in unemployment seen elsewhere) to Britain, Germany,
and France, with New Zealand on the other end.
I know less than he does about it, so I tend to defer to him...
Brad DeLong
