Janet Yellen is betting she has the formula for fending off deflationary forces. Investors and some of her fellow economists aren’t so sure.
The Fed chairwoman says history and theory suggest wages will pick up as the job market tightens, and prices will rise in line with the Federal Reserve’s 2 percent target. Former Treasury Secretary Lawrence Summers argues policymakers can’t count on this, while Richard Clarida of Columbia University in New York says it hasn’t happened in the last few economic expansions.
