Editors’ Summary of the Brookings Papers on Economic Activity – 1996 No 1

George L. Perry and

George L. Perry Senior Fellow Emeritus - Economic Studies

William C. Brainard

WCB

William C. Brainard

THE BROOKINGS PANEL on Economic Activity held its sixty-first
conference in Washington, D.C., on March 28 and 29, 1996. This issue
of Brookings Papers on Economic Activity includes the articles and
discussions presented at that conference. The first article rejects the
concept of a natural unemployment rate by examining the effects of
downward wage rigidity, and calls into question policies that would
target zero inflation. The second considers the Federal Reserve’s experience
with money targets and the lessons for rules versus discretion
and appropriate targets for U.S. monetary policymaking. The third
article examines the Tequila effect of the December 1994 Mexican peso
crisis in a sample of developing countries and analyzes the factors that
make a country vulnerable to financial crisis. The fourth reviews the
evidence from the previously communist-controlled countries of central
Europe and the former Soviet Union to show that radical programs of
liberalization and price stabilization have been more successful than
gradual reforms, in both economic and political terms. And the final
article traces the postwar decline in national saving to a redistribution
of resources from younger to older generations and a significant increase
in the consumption propensities of the elderly.