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November 30, 2013 5:11AM 

# New-Keynesian Thermodynamics 

By [George Selgin](https://www.cato.org/people/george-selgin) 

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Once, while a good friend was visiting me on a particularly cold winter’s night, the temperature in the poorly uninsulated living room of my old Victorian house dropped to a distinctly chilly 62 degrees. “Can’t you make it any warmer?” she asked? “I’m afraid I can’t,” I said; “the thermostat’s already on 68.” “Try setting it at 80,” she replied.

I didn’t indulge her (well, not that way). But I wonder whether those economists who have been calling for a higher inflation target would have.

##### Related Tags 

[Monetary Policy](https://www.cato.org/monetary-policy), [Alt-M](https://www.cato.org/alt-m), [Center for Monetary and Financial Alternatives](https://www.cato.org/center-monetary-financial-alternatives) 

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