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That was an insightful game. There was a negative demand shock scenario and to play it properly, it requires first dropping interest rate to 0%, then followed b
by wolpoli 4y ago
That was an insightful game. There was a negative demand shock scenario and to play it properly, it requires first dropping interest rate to 0%, then followed by high interest rate to bring inflation back down over time, which is exactly what's happening in the real world.
It's likely that's the reason why they took the game down.
- SkyMarshal 4y agoAny idea how it would expect you to handle negative demand shock first, then inflation driven by a subsequent supply shock (instead of or in addition to increased money supply)?
- jxf 4y agoWhen there are fewer goods circulating because of a negative supply shock, prices rise and you get inflation. The natural response for a central bank might be to reduce spending levels, so less money circulates and then inflation subsides. But that's usually bad (or at least very unpopular), because it compounds scarcity with scarcity and makes everybody worse off. Generally, non-monetary inflation/deflation is outside of a central bank's control and other policy levers should get pulled (e.g. Congress releasing stockpiles of material, for example).
- SkyMarshal 4y agoYeah that’s what I’m getting at - supply shocks probably need a different solution than scarcity^2.
- wolpoli 4y agoThe game only has one shock per scenario. But in a negative supply shock scenario, the game expects you to increase interest rate higher than the inflation rate, to maintain a positive real interest rate, to stop inflation from spiraling out of control.