dunnettreader + monetary_policy   163

Back To Gradualism
My reading of the consensus view is that the change in personnel at the Federal Reserve has coincided with a more hawkish outlook, although the tax cut…
Fed  interest_rates  inflation  fiscal_policy  monetary_policy  tax_cuts  multipliers  Evernote  from instapaper
march 2018 by dunnettreader
Flores-Maciss
What determines when states adopt war taxes to finance the cost of conflict? We address this question with a study of war taxes in the United States between 1789 and 2010. Using logit estimation of the determinants of war taxes, an analysis of roll-call votes on war tax legislation, and a historical case study of the Civil War, we provide evidence that partisan fiscal differences account whether the United States finances its conflicts through war taxes or opts for alternatives such as borrowing or expanding the money supply. Because the fiscal policies implemented to raise the revenues for war have considerable and often enduring redistributive impacts, war finance—in particular, war taxation—becomes a high-stakes political opportunity to advance the fiscal interests of core constituencies. Insofar as the alternatives to taxation shroud the actual costs of war, the findings have important implications for democratic accountability and the conduct of conflict. - Downloaded via iphone
US_history  downloaded  politics-and-money  US_military  deficit_finance  sovereign_debt  business_cycles  international_finance  fiscal_policy  Congress  US_foreign_policy  capital_markets  fiscal-military_state  political_history  article  political_economy  monetary_policy  taxes  US_politics  accountability  financial_system  redistribution  business-and-politics 
july 2017 by dunnettreader
Reading: Barry Eichengreen (2011): Economic History and Economic Policy via Brad DeLong
Barry Eichengreen (2011): Economic History and Economic Policy - EHA Presidential Address 2011
As you read, formulate your answers to the following questions:
1. What does Eichengreen think are the uses of history, as shown in the use of history in trying to understand the macroeconomic crisis that began in 2008?
2.What does Eichengreen think are the abuses of history, as shown in the use of history in trying to understand the macroeconomic crisis that began in 2008?
3.What rules and approaches does Eichengreen arrive it for future people trying to use history better?
Downloaded via iPhone to DBOX
monetary_policy  historiography-postWWII  QE  fiscal_policy  unemployment  historiography-19thC  economic_history  economic_policy  Keynesianism  speech  FX-rate_management  downloaded  central_banks  Great_Depression  historiography  FX  austerity  financial_system  financial_crisis  financial_regulation  Minsky  historiography-20thC  FX-misalignment  Great_Recession  inflation 
january 2017 by dunnettreader
James Tobin - The Monetarist Counter-Revolution Today - An Appraisal (1981) | The Economic Journal on JSTOR
The Monetarist Counter-Revolution Today-An Appraisal
James Tobin
The Economic Journal
Vol. 91, No. 361 (Mar., 1981), pp. 29-42
Published by: Wiley on behalf of the Royal Economic Society
DOI: 10.2307/2231692
Stable URL: http://www.jstor.org/stable/2231692
Via Anne @ Thoma re Krugman returning to Tobin and seeing his counterblast as not the last feeble defense against the new kids on the block - Tobin was right!
Downloaded via iPhone to DBOX
RBC  20thC  downloaded  central_banks  Volker  article  social_sciences-post-WWII  wages  monetarism  Friedman_Milton  intellectual_history  economic_theory  monetary_policy  Tobin  inflation  interest_rates  oil_price  Fed  unemployment  post-WWII  Keynesianism 
september 2016 by dunnettreader
Eggertsson & Summers - How secular stagnation in open economies spreads and how it can be cured | VOX.eu, 22 July 2016
Secular stagnation in the open economies: How it spreads, how it can be cured - Gauti Eggertsson, Lawrence Summers - The secular stagnation hypothesis suggests that low interest rates may be the new normal in years to come. This column argues that this prospect should not only lead to a major rethinking of policy from the perspective of individual economies, but also a major rethinking about monetary and fiscal policy in the international context, the role of international capital flows, and the role of policy coordination across borders. In times of secular stagnation, events such as Brexit or the recent turbulence in Turkey have much larger spillover effects than under normal circumstances. -- Much of previous work, including our own writings (Summers 2014, Eggertsson and Mehotra 2014), focuses on the secular stagnation hypothesis in the context of the US. Our two recent papers, however, written jointly with Neil Mehrotra (Eggertsson et al. 2016a, hereafter EMS) and with Neil Mehrotra and Sanjay Singh (Eggertsson et al. 2016b, hereafter EMSS), highlight the importance of real exchange rates and especially international capital movements in spreading secular stagnation, and the resulting policy spillovers across countries. -- downloaded to Tab S2
paper  downloaded  international_political_economy  international_finance  monetary_policy  central_banks  fiscal_policy  investment  savings  capital_flows  contagion  stagnation  interest_rates 
august 2016 by dunnettreader
Thomas Palley » Blog Archive » Why ZLB Economics and Negative Interest Rate Policy (NIRP) are Wrong: A Theoretical Critique
NIRP is quickly becoming a consensus policy within the economics establishment. This paper argues that consensus is dangerously wrong, resting on flawed theory and flawed policy assessment. Regarding theory, NIRP draws on fallacious pre-Keynesian economic logic that asserts interest rate adjustment can ensure full employment. That pre-Keynesian logic has been augmented by ZLB economics which claims times of severe demand shortage may require negative interest rates, which policy must deliver since the market cannot. Regarding policy assessment, NIRP turns a blind eye to the possibility that negative interest rates may reduce AD, cause financial fragility, create a macroeconomics of whiplash owing to contradictions between policy today and tomorrow, promote currency wars that undermine the international economy, and foster a political economy that spawns toxic politics. Worst of all, NIRP maintains and encourages the flawed model of growth, based on debt and asset price inflation, which has already done such harm. Downloaded to Tab S2
paper  downloaded  macroeconomics  monetary_policy  interest_rates  central_banks  demand-side  zero-bound  FX-rate_management  economic_growth  economic_theory  financial_crisis  capital_flows  asset_prices  leverage  debt-overhang 
july 2016 by dunnettreader
Eggertsson, Mehrotra, Singh & Summers - A Contagious Malady? Open Economy Dimensions of Secular Stagnation | NBER June 2016
Gauti B. Eggertsson, Neil R. Mehrotra, Sanjay R. Singh, Lawrence H. Summers - Conditions of secular stagnation - low interest rates, below target inflation, and sluggish output growth - characterize much of the global economy. We consider an overlapping generations, open economy model of secular stagnation, and examine the effect of capital flows on the transmission of stagnation. In a world with a low natural rate of interest, greater capital integration transmits recessions across countries as opposed to lower interest rates. In a global secular stagnation, expansionary fiscal policy carries positive spillovers implying gains from coordination, and fiscal policy is self-financing. Expansionary monetary policy, by contrast, is beggar-thy-neighbor with output gains in one country coming at the expense of the other. Similarly, we find that competitiveness policies including structural labor market reforms or neomercantilist trade policies are also beggar-thy-neighbor in a global secular stagnation.
economic_theory  interest_rates  stagnation  economic_growth  OECD_economies  paywall  capital_flows  paper  international_finance  global_economy  contagion  monetary_policy  FX-rate_management  international_political_economy  competition-interstate  fiscal_policy  fiscal_multipliers  trade-policy  Labor_markets  austerity  competiveness-labor  wages  labor_standards 
july 2016 by dunnettreader
O Blanchard, J D Ostry, AR Ghosh, M Chamon - Macro effects of capital inflows: Capital type matters | VOX, CEPR’s Policy Portal - 26 November 2015
Some scholars view capital inflows as contractionary, but many policymakers view them as expansionary. Evidence supports the policymakers. This column introduces an analytic framework that knits together the two views. For a given policy rate, bond inflows lead to currency appreciation and are contractionary, while non-bond inflows lead to an appreciation but also to a decrease in the cost of borrowing, and thus may be expansionary.
paper  capital_flows  emerging_markets  capital_markets  monetary_policy  interest_rates  FX-rate_management  banking  FDI  portfolio  _investment  investors 
november 2015 by dunnettreader
Andrew Haldane: Labour's Share - speech to TUC | Bank of England - Nov 2015 - via Brad DeLong
Good overview of recent work on last 300 years by economic historians and technology impact projections -- lots on internal structural shifts within "labor" and vis a vis capital -- downloaded pdf to Note
speech  economic_history  labor_history  labor_share  Labor_markets  wages  productivity  productivity-labor_share  unemployment  skills  services  AI  IT  unions  UK_economy  monetary_policy  macroeconomic_policy  public_sector  Industrial_Revolution 
november 2015 by dunnettreader
Guillaume Vuillemey, review - Nicolas Buat, John Law: La dette ou comment s’en débarrasser - La Vie des idées - 8 juillet
Recensé : Nicolas Buat, John Law – La dette ou comment s’en débarrasser, Les Belles Lettres, Collection « Penseurs de la liberté », 2015, 272 p., 21 €.
-- Mots-clés : dette | monnaie | banques | XVIIIe siècle -- John Law a laissé son nom associé à un scandale financier considérable. Nicolas Buat retrace sa vie aventureuse, et ses projets ambitieux pour dynamiser l’économie et éteindre la dette de la France. -- Que l’on cherche à tirer de l’histoire de grands enseignements, ou que l’on se satisfasse d’y contempler une galerie de portraits et de tableaux sans conséquences pour notre temps, on ne peut demeurer indifférent au personnage de John Law. Le récent ouvrage biographique de Nicolas Buat – conservateur en chef des Archives de Paris – nous invite à le redécouvrir. S’il s’inscrit dans une série déjà relativement longue de travaux consacrés à Law (dont le plus connu est certainement le livre d’Edgar Faure, La Banqueroute de Law, paru en 1977), son grand mérite est de nous plonger dans l’atmosphère bouillonnante de la Régence, sans perdre le lecteur dans de trop pointilleuses descriptions du « Système » mis en place entre 1716 et 1720. -- downloaded pdf to Note
books  reviews  French_language  political_economy  18thC  biography  Law_John  French_government  French_politics  money  monetary_theory  monetary_policy  sovereign_debt  default  Mississippi_Company  bubbles  banking  currency  investors  Regency-France  financial_system  financial_crisis  capital_markets  financial_innovation  downloaded 
october 2015 by dunnettreader
'Mark Thoma - The Triumph of Backward-Looking Economi - cs'
In response to Paul Krugman’s recent post, “The Triumph of Backward-Looking Economics” — no surprise here — there is disagreement from Steve Williamson. So let… Thoma replays what the history shows - and as Krugman notes, it's insane that at the very time Volker was demonstrating Tobin's Keynesianism was right and the freshwater guys were all wet, the academic macroeconomists were letting the Chicago folks declare victory over the hated Keynes and his fellow travelers. We should add Friedman to the list of those whom Volker proved wrong. And yet Friedman and the freshwater folks are considered giants by all bien pensants. There's something uncanny about how successful the Right is in rewriting history and have their phony claims become generally accepted "knowledge" (e.g. Reconstruction or Reagan win the Cold War) Most astonishing are the generations of academic economists who came up post1980 and have bought the death-of-failed-Keynes story. When with a moment's reflection the most unsophisticated would note the prima facia disconnect between freshwater and monetarist claims to have defeated Keynes at precisely the moment, when, between Volker and Reagan, Friedman's monetary policy was proven worse than useless in practice, supply side was indeed voodoo, and the major macro variables tracked the Keynesian framework. The history that economists tell each other is mostly right-wing propaganda.
social_sciences-post-WWII  Tobin  Romer  Volker  RBC  macroeconomic_policy  Keynesian  New_Keynesian  monetary_policy  macroeconomics  Instapaper  bad_history  Krugman  bad_economics  neoclassical_economics  monetary_theory  Lucas 
september 2015 by dunnettreader
R Böhme, N Christin, B Edelman & T Moore - Bitcoin: Economics, Technology, and Governance (2015) | AEAweb: Journal of Economic Perspectives, 29(2): 213-38.
Bitcoin is an online communication protocol that facilitates the use of a virtual currency, including electronic payments. Bitcoin's rules were designed by engineers with no apparent influence from lawyers or regulators. Bitcoin is built on a transaction log that is distributed across a network of participating computers. It includes mechanisms to reward honest participation, to bootstrap acceptance by early adopters, and to guard against concentrations of power. Bitcoin's design allows for irreversible transactions, a prescribed path of money creation over time, and a public transaction history. Anyone can create a Bitcoin account, without charge and without any centralized vetting procedure—or even a requirement to provide a real name. Collectively, these rules yield a system that is understood to be more flexible, more private, and less amenable to regulatory oversight than other forms of payment—though as we discuss, all these benefits face important limits. Bitcoin is of interest to economists as a virtual currency with potential to disrupt existing payment systems and perhaps even monetary systems. This article presents the platform's design principles and properties for a nontechnical audience; reviews its past, present, and future uses; and points out risks and regulatory issues as Bitcoin interacts with the conventional financial system and the real economy. -- downloaded pdf to Note
article  Bitcoin  blockchain  payments_systems  financial_system  financial_regulation  monetary_policy  money  money_supply  asset_prices  financial_innovation  macroeconomic_policy  downloaded 
september 2015 by dunnettreader
Brad DeLong - Liberal Activism!: Federal Reserve Jackson Hole 2015 Weblogging Edition
Roundup of arguments against raising interest rates, starting with Summers. Krugman sees a split among the MIT-educated crowd of whether you're an insider with e.g. the Fed and IMF or an outsider like Summers and Krugman. Brad speculates it may be a combination of (1) Krugman's theory that "everybody wants to be Paul Volker" so wants "normalized" interest rates so they can (try to) conduct "normal" economic policy and (2) the Fed especially, being immersed in views coming from the banking sector, which still has significant input. He turns to a study from the Boston Fed -- Roger T. Johnson: Historical Beginnings: The Federal Reserve: "On June 23, 1913, President Wilson appeared before a joint session of Congress and presented his program... -- which goes into the gory details of the intense organized opposition to the creation of the Fed from the banks, and the structures that gave banks important ownership and policy influence. Downloaded pdf of Johnson study to Note
Instapaper  US_politics  economic_policy  monetary_policy  Fed  Congress  banking  lobbying  interest_rates  regulatory_capture  Krugman  Summers  downloaded 
august 2015 by dunnettreader
Jane E. Ihrig, Ellen E. Meade, Gretchen C. Weinbach - Monetary Policy 101: A Primer on the Fed's Changing Approach to Policy Implementation | US Federal Reserve Board of Governors - June 2015. - via IDEAS
The Federal Reserve conducts monetary policy in order to achieve its statutory mandate of maximum employment, stable prices, and moderate long-term interest rates as prescribed by the Congress and laid out in the Federal Reserve Act. For many years prior to the financial crisis, the FOMC set a target for the federal funds rate and achieved that target through purchases and sales of securities in the open market. In the aftermath of the financial crisis, with a superabundant level of reserve balances in the banking system having been created as a result of the Federal Reserve's large scale asset purchase programs, this approach to implementing monetary policy will no longer work. This paper provides a primer on the Fed's implementation of monetary policy. We use the standard textbook model to illustrate why the approach used by the Federal Reserve before the financial crisis to keep the federal funds rate near the FOMC's target will not work in current circumstances, and explain the approach that the Committee intends to use instead when it decides to begin raising short-term interest rates. -- downloaded pdf to Note
US_economy  financial_system  Fed  central_banks  monetary_policy  interest_rates  money_market  banking  GSEs  institutional_investors  NBFI  downloaded 
august 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - How the Fed will tighten — Money, Banking and Financial Markets - August 2015
So, as the FOMC moves to “normalize” monetary policy after years of extraordinary accommodation – eventually raising the federal funds rate to their projected long-run norm of nearly 4% – how, precisely, will the Fed tighten monetary policy? The answer is that the mechanics will be fundamentally different from previous Fed tightening cycles. While the nature of the prospective policy tools will be familiar to long-time specialists, their use will be radically different. As a result, the chapter on Fed operations in money and banking textbooks (including ours) will once again be substantially amended to explain this new framework to the next generation of students aiming to understand the U.S. central bank. This post summarizes why the Fed’s policy mechanics must change and the basics of how the operating framework will function going forward. For those interested in a more detailed version of this discussion, Fed researchers Ihrig, Meade, and Weinbach recently published an excellent primer that is likely to be a reference for years to come. Tags: Federal Reserve, Policy tools, Policy mechanics, Repo, Reverse repo, ON RRP, Term RRP, Term deposit, IOER, IORR, Interest on reserves, GSEs -- downloaded page as pdf to Note
US_economy  financial_system  Fed  central_banks  monetary_policy  interest_rates  money_market  banking  GSEs  institutional_investors  NBFI  downloaded 
august 2015 by dunnettreader
Leeper, Traum, Walker - Clearing Up the Fiscal Multiplier Morass: Prior and Posterior Analysis | NBER Working Paper July 2015
Eric M. Leeper, Nora Traum, Todd B. Walker -- NBER Working Paper No. 21433 -- We use Bayesian prior and posterior analysis of a monetary DSGE model, extended to include fiscal details and two distinct monetary-fiscal policy regimes, to quantify government spending multipliers in U.S. data. The combination of model specification, observable data, and relatively diffuse priors for some parameters lands posterior estimates in regions of the parameter space that yield fresh perspectives on the transmission mechanisms that underlie government spending multipliers. Posterior mean estimates of short-run output multipliers are comparable across regimes—about 1.4 on impact—but much larger after 10 years under passive money/active fiscal than under active money/passive fiscal—means of 1.9 versus 0.7 in present value. -- quelle surprise
paper  paywall  NBER  fiscal_policy  monetary_policy  monetary_policy-effectiveness  countercyclical_policy 
august 2015 by dunnettreader
Jonathan L. Willis and Guangye Cao - US economy becoming less sensitive to interest rate changes - via Hutchins Roundup | Brookings Institution July 30 2015
Jonathan L. Willis and Guangye Cao of the Kansas City Fed find that, prior to 1985, a 0.25 percentage point reduction in the federal funds rate was associated with a roughly 0.2 percent increase in employment over the following 2 years—255,000 jobs in today’s market—but that the same rate cut today has almost no impact on employment. The authors argue that this is due to a weaker link between short- and long-run interest rates and a general shift in employment from interest rate sensitive industries like manufacturing and construction to less sensitive service providing sectors. -- downloaded pdf to Note
paper  US_economy  monetary_policy  interest_rates  investment  manufacturing  services  unemployment  economic_growth  monetary_policy-effectiveness  macroeconomic_policy  downloaded 
july 2015 by dunnettreader
David Glaser - Neo-Fisherism and All That | Uneasy Money
A few weeks ago Michael Woodford and his Columbia colleague Mariana Garcia-Schmidt made an initial response to the Neo-Fisherian argument advanced by, among… re Nick Rowe carefully explaining how you can't get from one equilibrium to the other that the Neo-Fischerites think the central bank should get to, but Glaser is less respectful about their nonsense. It's truly mind-boggling how the entire RBC research program, which was embraced because you could have dterminate truth without having to match the real world because the world would match your model, has reached the ultimate absurdity of the model reduced to a single variable in comparative statics with no way to get between them.
Instapaper  economic_theory  macroeconomics  neoclassical_economics  RBC  monetary_policy  interest_rates  inflation-expectations  from instapaper
july 2015 by dunnettreader
Hélène Rey - Dilemma Not Trilemma: The Global Financial Cycle and Monetary Policy Independence (2013)
Rey, Hélène, 2013, “Dilemma Not Trilemma: The Global Financial Cycle and Monetary Policy Independence” (Kansas City, Missouri: Federal Reserve Bank). -- downloaded pdf to Note
International_economics  international_finance  international_monetary_system  capital_flows  FX  monetary_policy  capital_markets  capital_controls  emerging_markets  downloaded  from notes
july 2015 by dunnettreader
David Glaser - Exposed: Milton Friedman’s Cluelessness about the Insane Bank of France | Uneasy Money - July 2015
About a month ago, I started a series of posts about monetary policy in the 1920s, (about the Bank of France, Benjamin Strong, the difference between a… -- excellent post that gives helpful explanation of what and why the Vanque de France was doing vacuuming up the world's gold supply, and how Friedman’s reading office the memoirs of the head of the Banque de France was so distorted by his worldview that he totally missed what was said and, in the intro to the English translation, totally misrepresented or whizzed by the critical bits in the memoirs, which are quite clear on what the Banque de France was doing, which totally explodes Friedman’s interpretation of the world-wide Great Depression as the fault of the Fed to "follow the gold standard rules" -- though Friedman acknowledges that in re-reading the memoirs in translation he finds that the French shared some of the blame, (1) he misses that France's inporting of gold was an order of magnitude greater than the US, and (2) totally misunderstands the operation of the gold exchange standard. He's ssuming a vulgar version of the price-specie flow mechanism of under and over-valued, as measured solely by the US bilateral trade with the UK rather than price levels relative to the global gold price, (3) assumes that domestic prices were being adjusted by domestic monetary policy, whereas it was prices relative to the international price of gold, rather than the domestic quantity of money, that was doing the work -- so the global increase in gold price engineered primarily by the "insane Banque de France" (with the US Fed as only a minor accomplice) had globally catastrophic deflationary effects.
economic_history  entre_deux_guerres  Great_Depression  central_banks  gold_standard  monetary_policy  monetary_theory  Friedman_Milton  international_monetary_system  French_politics  from instapaper
july 2015 by dunnettreader
Paul Beaudry, Dana Galizia, Franck Portier - The market economy’s stability | VOX, CEPR’s Policy Portal - 04 July 2015
Whereas some view the macroeconomy as overall stable and on a smooth long-run growth path, others argue it is unstable with repeated periods of booms and busts. This column suggests that the market economy is inherently unstable and booms and busts arise endogenously as the results of market incentives. Monetary policy is then perhaps not the right tool for addressing macroeconomic fluctuations. Instead, policies aimed at changing the incentives would be more appropriate.
macroeconomics  economic_models  economic_theory  business_cycles  monetary_policy  incentives  macroprudential_policies  non-linear_models  stability  downloaded 
july 2015 by dunnettreader
Arthur Goldhammer - The Old Continent Creaks | Democracy Journal: Summer 2015
not so long ago (the EU) was praised by some as a model of ingenious institutional innovation and cooperative transnational governance, while simultaneously denounced by others as an insidious instrument for subjecting ostensibly democratic states to the imperious dictates of capitalism in its latest “neoliberal” form? For 2 generations after World War II, memories of the devastating consequences of nationalism trumped economic rivalries, giving technocrats maneuvering room to devise continental strategies for economic growth that nevertheless enabled member states to maintain sufficient control over social policy to satisfy voter demands. For decades, this arrangement held.By the mid-1980s, however, enormous changes in the global economy forced the European Community to reinvent itself in order to remain competitive. The original balance between national sovereignty and technocratic government at the European level was altered, limiting the ability of member states to set their own economic policy. But today’s convergent crises raise the question of whether the European Union that replaced the European Community needs to reinvent itself yet again. And if so, is reinvention possible at a time when many Europeans, and especially those for whom World War II is a distant memory, feel that the EU is exacerbating nationalist enmities rather than calming them? -- downloaded pdf to Note
article  Europe  20thC  21stC  EU  EU_governance  technocracy  nation-state  nationalism  regional_blocs  sovereignty  democracy_deficit  political_participation  opposition  globalization  competition-interstate  Eurozone  economic_policy  fiscal_policy  monetary_policy  sovereign_debt  downloaded 
july 2015 by dunnettreader
JW Mason - The Myth of Reagan’s Debt | Slackwire - June 2015
Arjun and I have been working lately on a paper on monetary and fiscal policy. (You can find the current version here.) The idea, which began with some posts on… It's all about the interplay of interest rates, growth rates and inflation rates -- thanks, Volker!
Instapaper  economic_history  political_history  20thC  post-WWII  US_politics  fiscal_policy  monetary_policy  deficit_finance  interest_rates  economic_growth  inflation  Volker  Fed  Reagan  budget_deficit  from instapaper
july 2015 by dunnettreader
Karl Whelan - The Grexit Mechanism: What It Means For The Future Of the Euro | Medium - June 26 2015
Greek crisis exposes cracks in the euro’s design that won’t be fixed by Greece leaving. Despite the euro’s legal status as an irrevocable currency union, the… Nice review of the tangle of economic, political and legal issues -- Default isn't by itself enough to force Grexit, so it's really what political stance the ECB takes, and even with Grexit there are the other members of the Eurozone suffering from similar problems as Greece -- Whelan: In recent years, the single most important factor that has papered over the cracks in the euro has been Mario Draghi’s “whatever it takes” commitment to preserve the euro. But if whatever-it-takes doesn’t prevent a Greek exit, there would be serious questions about what kind of euro the ECB was actually willing to bother preserving. Worth remembering is that what Draghi actually said was: "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough." The “within our mandate” bit has provided Draghi with plenty of wiggle room to decide what kind of euro he wants to preserve. It clearly doesn’t have to be one that includes Greece. And there may be others that get jettisoned. Whether this kind of a la carte euro will survive the test of time is highly questionable.
Instapaper  Eurozone  EU  ECB  EU_governance  Europe-federalism  monetary_policy  FX  lender-of-last-resort  Greece  Greece-Troika  IMF  sovereign_debt  banking  bank_runs  austerity  FX-misalignment  Spain  Portugal  Italy  political_economy  international_finance  international_monetary_system  from instapaper
june 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - Monetary policy and financial inclusion | Money and Banking - June 2015
Central bankers usually steer clear of discussions about inequality. They view monetary policy as a tool for stabilizing the economy. For many central banks,… -- discusses trade-offs between inflation and unemployment that won't be constant but will vary by structure of financial system including access to credit by lower income and wealth classes, which will both effect impact of recessions on behavior of demand and financial channels through which monetary policy is supposed to work -- so inequal impact doesn't have to be a policy objective that the central bank worries about like the objectives of economic recovery, or nflation, but it will be highly relevant as a condition for meeting the primary objectives and the effectiveness of tools available
Instapaper  monetary_policy  financial_system  banking  zero-bound  inflation  unemployment  business_cycles  access_to_finance  from instapaper
june 2015 by dunnettreader
Robert Waldmann - Angry Bear » What Remains of the Keynesian Revolution ? - February 2009
Robert Waldmann I like to criticize financies, financial regulators and fresh water economists. I should defend something for once. It is easy to criticize. So… -- with one outlier, the data still looking Keynesian
Instapaper  economic_theory  economic_models  macroeconomics  Great_Recession  Keynesianism  neoclassical_economics  RBC  rational_expectations  supply-side  demand-side  business_cycles  monetary_policy  fiscal_policy  from instapaper
june 2015 by dunnettreader
Macroprudentialism – A new Vox eBook | VOX, CEPR’s Policy Portal 15 December 2014
Dirk Schoenmaker -- overview and TOC -- Macroprudentialism is now part of the standard macroeconomic toolkit but it involves a set of relatively untested policies. This column introduces a new VoX eBook that collects the thinking of a broad range of leading US and European economists on the matter. A consensus emerges on broad objectives of macroprudential supervision, but important disagreements remain among the authors. -- downloaded pdf to Note
financial_system  financial_regulation  financial_crisis  central_banks  macroprudential_regulation  leverage  business_cycles  banking  NBFI  shadow_banking  monetary_policy  EU  Eurozone  OECD_economies  credit  mortgages  downloaded 
june 2015 by dunnettreader
Understanding the Modern Monetary System by Cullen O. Roche :: SSRN - revised April 1, 2013
Orcam Financial Group, LLC -- August 5, 2011 -- This paper provides a broad understanding of the workings of the modern fiat monetary system in the United States. The work is primarily descriptive in nature and takes an operational perspective of the modern fiat monetary system using the understandings of Monetary Realism. -- Pages in PDF File: 40 -- downloaded pdf to Note
macroeconomics  financial_economics  monetary_policy  monetary_theory  central_banks  banking  interest_rates  financial_system  financialization  demand-side  investment  economic_models  downloaded 
june 2015 by dunnettreader
Charles A.E. Goodhart, Philipp Erfurth - Monetary policy and long-term trends | VOX, CEPR’s Policy Portal - 03 November 2014
There has been a long-term downward trend in labour’s share of national income, depressing both demand and inflation, and thus prompting ever more expansionary monetary policies. This column argues that, while understandable in a short-term business cycle context, this has exacerbated longer-term trends, increasing inequality and financial distortions. Perhaps the most fundamental problem has been over-reliance on debt finance. The authors propose policies to raise the share of equity finance in housing markets; such reforms could be extended to other sectors of the economy. -- downloaded page as pdf to Note
macroeconomics  global_economy  globalization  labor_share  Labor_markets  inequality-global  inequality  inequality-wealth  OECD_economies  wages  housing  mortgages  debt  debt-overhang  asset_prices  interest_rates  bubbles  real_estate  equity-corporate  equity_markets  central_banks  monetary_policy  financial_system  financial_crisis  LTV  downloaded 
may 2015 by dunnettreader
Does Price Stability Entail Financial Stability? - Gloomy European Economist - May 2015
Krugman in fact takes position against the “conventional wisdom”, which has been widespread in academic and policy circles alike, that a link exists between financial and price stability; therefore the central bank can always keep in check financial instability by setting an appropriate inflation target. The global financial crisis is a clear example of the fallacy of this conventional wisdom, as financial instability built up in a period of great moderation. A recent analysis by Blot et al shows that the crisis is no exception, as over the past few decades, in the US and the Eurozone, the link between price and financial stability has been unclear and moreover unstable over time, as shown on the following figure.
monetary_policy  inflation  central_banks  Minsky  bubbles  financial_crisis  macroprudential_regulation  macroprudential_policies 
may 2015 by dunnettreader
Jonathan D. Ostry , Atish R. Ghosh , and Mahvash S. Qureshi - Managing Capital Flows in Frontier Economies | IMF Direct - April 2015
By Jonathan D. Ostry , Atish R. Ghosh , and Mahvash S. Qureshi  There has been a remarkable increase in financial flows to frontier economies from private… Enfin! Just 20+ years late. Nice roundup of various people (like Rodrik) thinking about all the variables, including what sorts of local institutional capacity (government and financial markets and institutions) are required for (1) absorbing different types of capital flows or (2) if a country wants to restrict flows in some fashion, to manage different types of restrictions. Additionally, there are challenges to the basic premise of encouraging capital flows to frontier markets -- these countries are more likely to be investment constrained than the unproven assumption that they're savings constrained. Macroeconomic impacts are also getting a closer look, not only the dilemmas of managing monetary policy and exchange rates -- e. g., FDI can be defeated if inflows raise the rate to reduce trade advantages. Since the biggest issuers from frontier markets tend to be the state, there's a big potential impact on sustainability of fiscal policy (to say nothing of corruption), and again the exchange rate impacts can be severe in both directions. The post is mainly an outline of an ambitious, multidimensional research program that's emerging among development economists, financial economists, macroeconomics in both the OECD countries and think tanks in emerging markets and the IFIs. -- finally the discussion has moved off the obsession with flight capital that took root in the 1980s and was the trump played anytime anyone questioned the happy-happy conventional wisdom of capital liberalization promoters.
economic_theory  macroeconomics  capital_flows  FDI  IFIs  IMF  capital_controls  fiscal_policy  monetary_policy  FX  FX-misalignment  neoliberalism  globalization  emerging_markets  frontier_markets  competitiveness  technology_transfer  infrastructure  development  financial_system  financial_regulation  financial_sector_development  financial_stability  banking  interest_rates  institutional_investors  institutional_capacity  institution-building  central_banks  governance  bibliography  Instapaper  from instapaper
may 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - Interview with Otmar Issing — Money, Banking and Financial Markets - April 2015
President, Center for Financial Studies, Goethe University; former member of the Executive Board of the European Central Bank; former member of the Executive Board of the Deutsche Bundesbank. -- remarkably smug about how well the ECB was able to handle the immediate crisis and the steps they've taken re monetary_policy and strengthening financial supervision within the constraints of EU and ECB treaty and authority limits -- unsurprisingly he wants to raise interest rates and normalize policy since he thinks we're already seeing build up of asset prices, risk etc that he thinks were responsible for the global financial crisis.
economic_policy  monetary_policy  central_banks  ECB  interest_rates  ZLB  yield  asset_prices  spreads  EU  Eurozone  Germany-Eurozone  financial_crisis  bubbles  financial_regulation  macroprudential_regulation  macroprudential_policies 
april 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - Is 2% still the solution? — Money, Banking and Financial Markets - March 2015
Finally, as we discussed in an earlier post, the move to a common inflation target across countries is a useful form of international monetary policy coordination. It is highly doubtful that the leading central banks would simultaneously agree to shift to a new common target in a relatively narrow time frame. Our bottom line: If policymakers had it to do over again, they could very well opt for a higher inflation target. But, given where we stand today, such a fundamental change in the policy framework, both nationally and internationally, is very unlikely. Rather, the belief that academic economists and central bankers can convince their elected officials and publics that 3% or 4% – rather than 2% – is the solution may be the real delusion. -- copied to Pocket
economic_theory  macroeconomics  monetary_policy  economic_policy  central_banks  QE  ZLB  inflation  inflation-expectations  interest_rate-natural  interest_rates  Pocket 
april 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - Zero matters — Money, Banking and Financial Markets - April 2015
What to conclude? Fears of deflation can surely be overdone: the economic impact of annual price changes of -0.1% would be difficult to distinguish from changes of +0.1%. It would take nearly 700 years for the price level to halve or to double at this pace! Yet, policymakers are warranted in taking the view that even mild deflations of 1% or 2% annually are meaningfully different from comparable inflations. Conventional monetary policy tools – adjusting nominal interest rates – are ill-suited to restoring price stability in the face of modest single-digit deflation. And the presence of downward wage rigidities makes things even worse. -- nice collection of historical and comparative data -- copied to Pocket
economic_theory  macroeconomics  monetary_policy  ZLB  wages  wages-sticky  inflation  inflation-expectations  deflation  interest_rates  economic_growth  economic_culture  Labor_markets  Great_Recession  Pocket 
april 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - The euro area's debt hangover — Money, Banking and Financial Markets - April 2015
You wouldn’t know it from the record low level of government bond yields, but much of Europe lives under a severe debt burden. Nonfinancial corporate debt exceeds 100 percent of GDP in Belgium, Finland, France, Ireland, Luxembourg, Netherlands, Portugal, and Spain. And, gross government debt (as measured by Eurostat) is close to or exceeds this threshold in Belgium, France, Greece, Ireland, Italy, Portugal and Spain. Debt levels this high have important long-run consequences. (...) they are a drag on growth. High debt means that households have more difficulty maintaining consumption when income falls; firms may be unable to keep up production and investment when revenue dips; and governments are in no position to smooth expenditure when revenue falls. More economic volatility means lower growth. Beyond that, high levels of debt reduce the effectiveness of central bank stimulus. (...) So, what is the euro area to do? We see three paths out of this predicament: (1) breathtaking supply reforms that trigger an investment boom; (2) inflation; or (3) a mix of asset sales and debt relief.The first option is the best. The alternatives would threaten the survival of the euro, undermine the fiscal credibility of major governments, or both. [After pointing out the problems with 1 and 2, they look at how much would sovereign_debt have to be reduced to reach debt sustainability targets embodied in Maastricht] For Greece, the write-down is 71% of face value; for Spain, 63%; and for France 50%. Taken as a whole, meeting the 60% Maastricht criterion (while maintaining bank system capital) would require that (..the) combined debt of [Greece, Spain and France of] €9.36 trillion be written down by a total of €5.07 trillion. As extreme as this sounds, it is, in fact, insufficient. Many euro-area governments also face significant unfunded pension liabilities. (...) The sooner they own up to this, the better for their long-term growth prospects. -- copied to Pocket
EU  Eurozone  debt  debt-overhang  debt-restructuring  sovereign_debt  leverage  deleverage  economic_growth  economic_reform  creditors  default  monetary_policy  ECB  central_banks  interest_rates  investment  deficit_finance  debt_crisis  corporate_finance  demand-side  supply-side  capital_markets  Great_Recession  financial_crisis  financial_system  banking  capital_adequacy  Pocket 
april 2015 by dunnettreader
Lars Syll - The Bernake-Summers Imbroglio | RWER April 2015
As no one interested in macroeconomics has failed to notice, Ben Bernanke is having a debate with Larry Summers on what’s behind the slow recovery of growth rates since the financial crisis of 2007. To Bernanke it’s basically a question of a savings glut. To Summers it’s basically a question of a secular decline in the level of investment. To me the debate is actually a non-starter, since they both rely on a loanable funds theory and a Wicksellian notion of a “natural” rate of interest — ideas that have been known to be dead wrong for at least 80 years … Let’s start with the Wicksellian connection and consider what Keynes wrote in General Theory: -- helpful re Keynes' rejection of "natural rate" (in effect there's a different natural rate for each level of employment - income, so it's comparative statics that blows up when savings or investment change, rather than being able to derive new equilibrium natural rate) -- and the problems with loanable funds theory - looks especially at Minsky and Kalecki - credit creation isn't result of increased savings but increased investment. Good snips and links -- saved to Pocket
economic_theory  macroeconomics  stagnation  savings_glut  global_imbalance  interest_rate-natural  monetary_policy  monetary_theory  central_banks  credit  financial_system  financial_economics  loanable_funds  investment  accounting_IDs  equilibrium  economic_models  Keynes  Minsky  Kalecki  links  Instapaper 
april 2015 by dunnettreader
Ashoka Mody - Living (dangerously) without a fiscal union | Bruegel.org - March 24 2015
The euro area’s political contract requires member nations to rely principally on their own resources when confronted with severe economic distress. Since monetary policy is the same for all, national fiscal austerity is the default response to counter national fiscal stress. Moreover, the monetary policy was itself stodgy in countering the crisis, and banking-sector problems were allowed to fester. And it was considered inappropriate to impose losses on private sector creditors. Thus, the nature of the incomplete monetary union and the self-imposed taboos led deep and persistent fiscal austerity to become the norm. As a consequence, growth was hurt, which undermined the primary objective of lowering the debt burden. To prevent a meltdown, distressed nations were given official loans to repay private creditors. But the stress and instability continued and soon it became necessary to ease the repayment terms on official loans. When even that proved insufficient, the German-inspired fiscal austerity was combined with the deep pockets of the European Central Bank. The ECB’s safety net for insolvent or near-insolvent banks and sovereigns, in effect, substituted for the absent fiscal union and drew the central bank into the political process. -- downloaded pdf to Note
paper  Great_Recession  Eurozone  fiscal_policy  monetary_policy  austerity  ECB  banking  financial_system-government_back-stop  financial_crisis  too-big-to-fail  creditors  sovereign_debt  financial_regulation  capital_adequacy  capitalization  bailouts  bail-ins  debt-restructuring  debt  debt_crisis  debt-seniority  deleverage  political_economy  EU_governance  monetary_union  downloaded 
april 2015 by dunnettreader
Jennifer Pitts, review - Isaac Nakhimovsky, The Closed Commercial State: Perpetual Peace and Commercial Society from Rousseau to Fichte | Perspectives on Politics, March 2013 on Isaac Nakhimovsky - Academia.edu
This book presents an important new account of Johann Gottlieb Fichte's Closed Commercial State, a major early nineteenth-century development of Rousseau and Kant's political thought. Isaac Nakhimovsky shows how Fichte reformulated Rousseau's constitutional politics and radicalized the economic implications of Kant's social contract theory with his defense of the right to work. Nakhimovsky argues that Fichte's sequel to Rousseau and Kant's writings on perpetual peace represents a pivotal moment in the intellectual history of the pacification of the West. Fichte claimed that Europe could not transform itself into a peaceful federation of constitutional republics unless economic life could be disentangled from the competitive dynamics of relations between states, and he asserted that this disentanglement required transitioning to a planned and largely self-sufficient national economy, made possible by a radical monetary policy. Fichte's ideas have resurfaced with nearly every crisis of globalization from the Napoleonic wars to the present, and his book remains a uniquely systematic and complete discussion of what John Maynard Keynes later termed "national self-sufficiency." Fichte's provocative contribution to the social contract tradition reminds us, Nakhimovsky concludes, that the combination of a liberal theory of the state with an open economy and international system is a much more contingent and precarious outcome than many recent theorists have tended to assume. -- downloaded pdf to Note
books  reviews  18thC  19thC  intellectual_history  Germany  France  commerce  IR_theory  international_political_economy  international_system  international_law  luxury  trade-policy  protectionism  import_substitution  monetary_policy  French_Revolution  Rousseau  Kant  Fichte  civil_society  civil_liberties  rights-political  perpetual_peace  competition-interstate  free_trade  globalization  imperialism  downloaded 
march 2015 by dunnettreader
Frederick Neuhouser, review - Isaac Nakhimovsky, The Closed Commercial State: Perpetual Peace and Commercial Society from Rousseau to Fichte | Notre Dame Philosophical Reviews - Nov 2011
Frederick Neuhouser, Barnard College -- Isaac Nakhimovsky has accomplished what I had thought to be impossible: he has made Fichte's The Closed Commercial State (1800) into an interesting text. By carefully situating this long-neglected work within its historical and philosophical context, Nakhimovsky enables us to see it as more than a misguided attempt by a major philosopher to address the political issues of his day by inventing a utopian vision of the free republic so obviously fantastic that it was widely dismissed as such by most of Fichte's own contemporaries. To his credit, Nakhimovsky does not deny the silliness of many of the details of that vision. What he shows, however, is the urgency -- and, more importantly, the continuing relevance -- of the central problem that Fichte's text attempts to solve: how to reconcile a Rousseauean ideal of free citizenship with the realities of modern "commercial" societies (marked, in Fichte's time, by a decline in agriculture in favor of industry and a rapidly increasing division of labor). Since the principal conflict here is the threat posed by international trade relations to the freedom and economic well-being of the citizens of republics enmeshed in those relations, it is not difficult (with Nakhimovsky's assistance) to see this seemingly most untimely of texts as addressing what is merely an earlier version of the same conflict that stands, even today, at the center of Europe's woes. One of the great strengths of Nakhimovsky's book is that it treats The Closed Commercial State as standing in a long line of seventeenth- and eighteenth-century texts that debate the implications for international peace of what we would call "globalized" commerce. (Kant's Perpetual Peace [1795] is the best known of these texts, it merely continues a much longer tradition that includes works by Fenélon, l'Abbé de Saint-Pierre, Rousseau, Sieyès, and many others.) -- downloaded as pdf to Note
books  reviews  18thC  19thC  intellectual_history  Germany  France  commerce  IR_theory  international_political_economy  international_system  international_law  luxury  trade-policy  protectionism  import_substitution  monetary_policy  French_Revolution  Rousseau  Kant  Fichte  civil_society  civil_liberties  rights-political  perpetual_peace  competition-interstate  free_trade  globalization  imperialism  downloaded 
march 2015 by dunnettreader
Janet L. Yellen, “Behavioral Economics and Economic Policy in the Past and Future” (September 2007 speech) - President and CEO, Federal Reserve Bank San Francisco
Panel on: “Behavioral Economics and Economic Policy in the Past and Future”
Federal Reserve Bank of Boston Conference: “Implications of Behavioral Economics for Economic Policy”, Boston, Massachusetts, September 28, 2007 -- linked to as good literature overview for behavioral_economics and its uses -- downloaded pdf to Note
speech  Yellen  Fed  central_banks  monetary_policy  fiscal_policy  economic_policy  behavioral_economics  economic_theory  economic_sociology  macroeconomics  microfoundations  incentives  incentives-distortions  lit_survey  bibliography  downloaded 
february 2015 by dunnettreader
F.A. Hayek - A Free Market Monetary System and The Pretense of Knowledge - Books | Mises Institute
Here are two of Hayek's greatest essays in one volume. The book begins with Hayek's most excellent essay on money. It is also his most radical. He plainly says that central banks cannot be reformed. There can never be sound money so long as they are in charge. He calls for their complete abolition, no compromises accepted. He wants the market in charge of money from top to bottom. His words predicting crisis followed by wild swings in valuation are up to the minute. He also relates the quality of money with the recurrence of crisis, showing an excellent application of Austrian theory. Hayek was deeply influenced by Mises, and this shows here in the area of money. The second essay is "The Pretense of Knowledge," his shocking Nobel speech that explained why the very idea of government in our times is unintellectual, presumptuous, and untenable. He is as critical of socialism as he is of interventionism. He shows that the state is not capable of doing all that it is charged with doing, and why conceding it any role in social and economic management is dangerous to liberty. -- copyright Mises Institute 2009 -- downloaded pdf to Note
books  etexts  20thC  Hayek  intellectual_history  economic_theory  social_theory  Austrian_economics  monetary_policy  central_banks  gold_standard  epistemology-social  information-markets  economic_policy  downloaded 
february 2015 by dunnettreader
Josh Bevins - Macroeconomic effects of regulatory changes in economies with large output gaps: The ‘toxics rule’ as an example | Economic Policy Institute - 2012
This paper uses the “toxics rule” issued by the Environmental Protection Agency (EPA) in December 2011 to sketch out a macroeconomic framework for thinking about the impact of regulatory changes on jobs. The paper’s major findings are: * (1) Even during normal economic times the effect of regulatory changes that increase the input cost of some businesses is most likely to shrink the measured “output gap” (the difference between what the economy is actually producing and what it could be producing if all resources were fully employed). * (2) During normal economic times, the effect of the downward pressure on output gaps will be fully offset by a Federal Reserve that is trying to maintain a constant inflation target. * (3) During times of significant economic slack, the downward pressure on the output gap caused by cost-raising regulatory changes is unlikely to be fully neutralized by a Federal Reserve that puts any weight at all on unemployment. * (4) When significant economic slack persists even when the interest rates controlled by the Federal Reserve are held at zero, the overall effect of cost-raising regulatory changes is almost surely expansionary. ... the list of neutral to benign macro effects continues -- downloaded pdf to Note
regulation-costs  regulation-environment  macroeconomics  monetary_policy  economic_growth  economic_models  unemployment  interest_rates  Fed  cost-benefit  downloaded  EF-add 
january 2015 by dunnettreader
Thomas Palley » The Federal Reserve and Shared Prosperity: A Guide to the Policy Issues and Institutional Challenges - Jan 2015
The Federal Reserve is a hugely powerful institution whose policies ramify with enormous effect throughout the economy. Its policies impact almost every important aspect of the economy and it is doubtful the US can achieve shared prosperity without the policy cooperation of the Fed. That makes understanding the Federal Reserve, the policy issues and institutional challenges, of critical importance. -- downloaded pdf to Note
economic_theory  economic_sociology  economic_culture  central_banks  institutional_economics  institutional_change  monetary_policy  financial_system  US_economy  US_politics  downloaded  EF-add 
january 2015 by dunnettreader
Forrest Capie, review - Eric Helleiner, The Making of National Money: Territorial Currencies in Historical Perspective | JSTOR - The Economic History Review Vol. 56, No. 3 (Aug., 2003), p. 594
Mostly a 19thC to 20thC phenomenon relying on creation of nation-state and industrial capacity. Discusses what countries did and do without national currency, challenges to establishing e.g. free banking, alternatives e.g. dollarization with or contra to government policy. Downloaded 1 page review to Note
books  reviews  jstor  economic_history  19thC  20thC  nation-state  national_ID  monetary_policy  fiscal_policy  currency  commerce  FX  dollarization  free_banking  downloaded  EF-add 
january 2015 by dunnettreader
George Selgin - Steam, Hot Air, and Small Change: Matthew Boulton and the Reform of Britain's Coinage | JSTOR - The Economic History Review Vol. 56, No. 3 (Aug., 2003), pp. 478-509
This article challenges the claim that Great Britain solved its 'big problem of small change' (the problem of keeping decent low-denomination coins in circulation) by embracing Matthew Boulton's steam-based coining technology. Evidence from Great Britain's commercial token episode (1787-97) shows that a successful small change system depended, not on the motive power employed in coining, but on the quality and consistency of coin engravings and on having means for systematically withdrawing worn coins. The Tower Mint failed to solve Great Britain's small change problem, not because its equipment was old-fashioned, but because its policies and constitution were flawed. -- excellent bibliography -- challenges story in Sargeant and Velde "Big Problem of Small Change" - bookshelf -- downloaded pdf to Note
article  jstor  economic_history  Europe-Early_Modern  18thC  19thC  British_history  currency  commerce  Innovation  UK_Government  monetary_policy  gold_standard  Napoleonic_Wars  bookshelf  bibliography  downloaded  EF-add 
january 2015 by dunnettreader
How the US Resolved Its First Debt Ceiling Crisis | Liberty Street Economics - March 2013
downloaded pdf to iPhone - the post has full text but without the references in the pdf -- In the second half of 1953, the United States, for the first time, risked exceeding the statutory limit on Treasury debt. How did Congress, the White House, and Treasury officials deal with the looming crisis? As related in this post, they responded by deferring and reducing expenditures, by monetizing “free” gold that remained from the devaluation of the dollar in 1934, and ultimately by raising the debt ceiling.
paper  downloaded  post-WWII  US_economy  US_politics  military-industrial_complex  monetary_policy  Bretton_Woods  international_monetary_system  FX  fiscal_policy  budget_deficit  Congress  sovereign_debt 
january 2015 by dunnettreader
Brad DeLong - Slides for a Talk: Thoughts on Making a Better Economics
Downloaded pdf to iPhone and saved html to Evernote - gaps between pre-crisis econ and lost or underused knowledge - and gaps between ehat economists knew and said vs public understanding & further gap to policy -- lots of links
economic_theory  macroeconomics  macroeconomic_policy  austerity  fiscal_policy  monetary_policy  downloaded  links 
january 2015 by dunnettreader
June a Good Bet for Rate Hike | Brookings Institution
Interview with Domald Kohn - focus on Yellen's forward guidance vs language & pattern of rate changes pre crisis
Fed  monetary_policy  interest_rates 
january 2015 by dunnettreader
SNB working paper - Konrad Adler & Christian Grisse: “Real exchange rates and fundamentals: robustness across alternative model specifications” (Oct 2014) | via The Big Picture
This paper explores the robustness of behavioural equilibrium exchange rate (BEER) models, focusing on a panel specification with Swiss franc real bilateral rates as dependent variables. We use Bayesian model averaging to illustrate model uncertainty, and employ real exchange rates computed from price level data to explore robustness to the inclusion or exclusion of fixed effects. We find that the estimated coefficients – and therefore also the implied equilibrium values – are sensitive to (1) the combination of explanatory variables included in the model, (2) the set of currencies included in the panel and (3) the inclusion of fixed effects. Increases in government consumption and net foreign assets and improvements in the terms of trade in Switzerland relative to foreign countries are associated with a Swiss franc real appreciation, as predicted by economic theory. By contrast, several macroeconomic variables commonly thought to be linked to real exchange rates are found not to exhibit a robust relationship with Swiss franc real rates. Our findings can help policymakers in understanding the uncertainty associated with estimates of equilibrium exchange rates. - downloaded to iPhone
economic_theory  macroeconomics  intermational_economics  global_economy  FX  fiscal_policy  monetary_policy  central_banks  public_finance  interest_rates  inflation  asset_prices  paper  downloaded 
january 2015 by dunnettreader
Kose, Prasad, Rogoff & Wei (2009) - Financial Globalization: A Reappraisal
downloaded to iPhone - see also papers citing this - The literature on the benefits and costs of financial globalization for developing countries has exploded in recent years, but along many disparate channels with a variety of apparently conflicting results. There is still little robust evidence of the growth benefits of broad capital account liberalization, but a number of recent papers in the finance literature report that equity market liberalizations do significantly boost growth. Similarly, evidence based on microeconomic (firm- or industry-level) data shows some benefits of financial integration and the distortionary effects of capital controls, but the macroeconomic evidence remains inconclusive. At the same time, some studies argue that financial globalization enhances macroeconomic stability in developing countries, but others argue the opposite. This paper attempts to provide a unified conceptual framework for organizing this vast and growing literature, particularly emphasizing recent approaches to measuring the catalytic and indirect benefits to financial globalization. Indeed, it argues that the indirect effects of financial globalization on financial sector development, institutions, governance, and macroeconomic stability are likely to be far more important than any direct impact via capital accumulation or portfolio diversification. This perspective explains the failure of research based on cross-country growth regressions to find the expected positive effects of financial globalization and points to newer approaches that are potentially more useful and convincing.
credit  financial_innovation  spreads  financial_crisis  contagion  investment  financial_sector_development  interest_rates  FDI  emerging_markets  download  bubbles  FX  capital_flows  monetary_policy  fiscal_policy  financial_system  IMF  banking  NBFI  business_cycles  sovereign_debt  global_economy  macroeconomics  globalization 
january 2015 by dunnettreader
Jordà, Schularick and Taylor - Betting the House - NBER working paper - SSRN
They look at link between loose monetary policy, real estate lending, housing bubbles and financial instability. No surprise, they're correlated. Their added twist is to note that the same egfect can be produced by low intetest rates in effect "imported" by countries maintaining fixed exchange rates even if their domestic economic management is kosher - in a way, importing a business cycle snd misallocation of investment. The effect of these correlations to produce financial instability has increased over the decades. (undoubtedly exacerbated by the push to open capital accounts) SSRN version posted simultaneously with NBER version on SSRN - downloaded pdf to iPhone
capital_flows  business_cycles  credit  21stc  interest_rates  19thc  financial  crisis  financialization  monetary_policy  20thc  paper  asset  prices  bubbles  globalization  Pocket  real_estate  FX  SSRN  downloaded 
january 2015 by dunnettreader
Simon Wren-Lewis - The Eurozone Scandal - Jan 2015
EZ output gap produced by austrrity fiscal policy equivalent to wasting entire EU annual budget, and quoting Ashok Mody, ECB's effective monetary policy is in fact extraordinarily tight given failire to pursue QE -- But if countercyclical fiscal policy is effectively illegal in the Eurozone, these objections do not apply. QE for the people may have additional legal merits within the Eurozone. The ECB is constrained to some (uncertain) extent in its ability to buy government debt. But, as John Muellbauer suggests, mailing a cheque to every EZ citizen using electoral registers would seem to circumvent these legal difficulties. One objection to the ECB embarking on ‘QE for the people’ is that it goes well beyond the remit of a central bank. [3] Yet the ECB appears to have no qualms on that score: besides routine references for the need for fiscal consolidation and ‘structural reform’, the letter discussed by Paul De Grauwe here shows the ECB requiring detailed changes to labour market regulations and institutions in Spain. So you have to ask why is it OK for the central bank to override the democratic process in this way, but giving money directly to the people is somehow beyond the pale.
Eurozone  austerity  fiscal_policy  monetary_policy  ECB  QE  Great_Recession 
january 2015 by dunnettreader
How big should central bank balance sheets be?
very useful discussion with good links - not just re developed economies but also emerging markets central banks
central_banks  monetary_policy  banking  liquidity  Fed  QE  links  emerging_markets 
december 2014 by dunnettreader
Monetary Policy: A Lesson Learned
Nice potted comparison of Fed inaction in 1930s vs recent agressive QE --The post-crisis actions of the Fed and responses of the banks have a very important implication. Quite a few observers argued that a massive increase in reserves would lead to an uncontrolled inflation. Had the money multiplier in the bottom chart been stable, they would have been right. However, when a financial crisis impairs the banking system, reserve increases do not translate into money creation, so they are not inflationary. In fact, as the experience of the 1930s taught us, in the absence of aggressive actions by the Federal Reserve, the financial crisis probably would have led to deflation and a second Great Depression.
economic_history  Great_Depression  Great_Recession  monetary_policy  Fed  QE  US_economy 
december 2014 by dunnettreader
Jocelyn Pixley, G.C. Harcourt eds. - Financial crises and the nature of capitalist money: Mutual developments from the work of Geoffrey Ingham (2013) | Palgrave Macmillan
This volume is a debate about a sociology and economics of money: a form of positive trespassing (..) written by scholars of both disciplines (..) starting from the original groundwork laid by Geoffrey Ingham. The contributors look critically at money's institutions and the meanings and history of money-creation and show the cross cutting purposes or incommensurable sides of money and its crises. (...) since money is a promise, understanding this social relation must be a joint though plural task between economics and sociology at the very least. **--** Preface; R. Swedeberg *-* 1. Introduction to Positive Trespassing'; J. F. Pixley and G. C. Harcourt *-* 2. Requirements of a Philosophy of Money and Finance; J. Smithin *-* 3. Ingham and Keynes on the Nature of Money; M. Hayes *-* 4. Money: Instrument of Exchange or Social Institution of Value? A. Orlean and C. Goodhart *-* 5. A New Meme for Money, R. Wray *-* 6. Monetary Surrogates and Money's Dual Nature; D. Woodruff *-* 7. Reforming Money to Exit the Crisis: Examples of Non-capitalist Monetary Systems in Theory and Practice; L. Fantacci *-* 8. The Current Banking Crisis in the UK: an Evolutionary View; V. Chick *-* 9. Money and the State; M. Sawyer *-* 10. The Real (Social) Experience of Monetary Policy; S. Dow *-* 11. Economic Policies of the New Consensus Macroeconomics: A Critical Appraisal; P. Arestis *-* 12. A Socio-economic Systems Model of the 2007+ Global Financial Crisis; T.R. Burns, A. Martinelli and P. Deville *-* 13. Credit Money, Fiat Money and Currency Pyramids: Critical Reflections on the Financial Crisis and Sovereign Debt, B. Jessop *-* 14. Geoffrey Ingham's Theory, Money's Conflicts and Social Change; J. Pixley *-* 15. Reflections on the Two Disciplines' Mutual Work; G. Ingham
books  social_theory  economic_theory  social_sciences  disciplines  money  economic_sociology  economic_culture  macroeconomics  financial_economics  financial_system  banking  financial_crisis  sovereign_debt  monetary_theory  money-Cartelist  money_supply  monetarism  monetary_policy  central_banks  financial_innovation 
november 2014 by dunnettreader
Ylan Q. Mui - How the Fed is trying to fill in the gaps of monetary policy - The Washington Post - Oct 2014
[T]he Fed in recent years has made a concerted effort to incorporate Main Street concerns into their considerations of macroeconomic policy. On Thursday, Yellen will meet with nonprofits and community developers in Chelsea that have received funding through an initiative at the Boston Fed to address some of the economy’s most intractable problems — from long-term unemployment to access to credit — on the ground level. “When you think about maximum employment, monetary policy can deal with the cyclical," Boston Fed President Eric S. Rosengren said in an interview Thursday. "If we were able to change the mindset in some of these cities, the employment picture in these cities would clearly be better.” In Chelsea, Yellen will tour a program called Connect, which focuses on financial security. ....The three-year-old program seems to be gaining traction where monetary policy cannot. Ann Houston, executive director of the Neighborhood Developers, one of the organizations involved in the project, said those in the program see a $400 median increase in monthly net income. The median increase in credit score is 35 points. “Increasingly, there’s this recognition that monetary policy is sort of a blunt instrument,” said David Erickson, director of the Center for Community Development at the San Francisco Fed, which has compiled extensive research on programs and places that have successfully reduced poverty. “In that case, you need a little bit more of a surgical tool, and that’s where community development comes in.”
US_economy  US_government  US_society  Fed  financial_access  inequality  unemployment  community_development  education-training  education-finance  monetary_policy  banking 
october 2014 by dunnettreader
Nitzan, Jonathan - LSE Public Event: Can Capitalists Afford Recovery? -- Video and Paper (May 2014) | bnarchives
Presentation at the LSE Department of International Relations. 27 May 2014. -- Theorists and policymakers from all directions and of all persuasions remain obsessed with the prospect of recovery. For mainstream economists, the key question is how to bring about such a recovery. For heterodox political economists, the main issue is whether sustained growth is possible to start with. But there is a prior question that nobody seems to ask: can capitalists afford recovery in the first place? If we think of capital not as means of production but as a mode of power, we find that accumulation thrives not on growth and investment, but on unemployment and stagnation. And if accumulation depends on crisis, why should capitalists want to see a recovery? -- Video duration: 2:24 hours -- Keywords: crisis, differential accumulation, economic policy, economic theory, expectations, growth, income distribution, Keynesianism, Marxism, monetarism, neoclassical economics, profit, underconsumption -- Subjects: BN State & Government, BN Power, BN Region - North America, BN Business Enterprise, BN Value & Price, BN Crisis, BN Production, BN Macro, BN Conflict & Violence, BN Money & Finance, BN Ideology, BN Distribution, BN Methodology, BN Capital & Accumulation, BN Policy, BN Class, BN Labour, BN Growth -- links to LSE on YouTube -- downloaded pdf to Note
paper  video  Great_Recession  financial_crisis  economic_growth  capital_as_power  capitalism-systemic_crisis  economic_theory  economic_models  macroeconomics  neoclassical_economics  Keynesian  Marxist  monetarism  monetary_policy  fiscal_policy  austerity  sovereign_debt  public_finance  public_policy  productivity  production  consumer_demand  underconsumption  investment  profit  productivity-labor_share  distribution-income  distribution-wealth  finance_capital  financialization  capitalization  accumulation  accumulation-differential  elites-self-destructive  elite_culture  ruling_class  class_conflict  Labor_markets  inequality  unemployment 
october 2014 by dunnettreader
Andreas Fuster and James Vickery - Securitization and the Fixed-Rate Mortgage | FRBNY Staff Reports Number 594 - January 2013 - Revised June 2014
Fixed-rate mortgages (FRMs) dominate the U.S. mortgage market, with important consequences for monetary policy, household risk management, and financial stability. In this paper, we show that the share of FRMs is sharply lower when mortgages are difficult to securitize. Our analysis exploits plausibly exogenous variation in access to liquid securitization markets generated by a regulatory cutoff and time variation in private securitization activity. We interpret our findings as evidence that lenders are reluctant to retain the prepayment and interest rate risk embedded in FRMs. The form of securitization (private versus government-backed) has little effect on FRM supply during periods when private securitization markets are well-functioning. -- Duh! That requires 77 pages to show originators are indifferent as to a GSE or a private FI as long as they can unload their product? Let's see what the authors think the big deal is about "well-functioning private markets" - private securitizers have mostly been in the well-collateralized top end that the GSEs didn't handle but the rating agencies and investors could be comfortable with. The private market eats into the GSEs business only when there's a boom that's going to end in tears - although before the Great Recession the busts were localized, so the private securitizers (and their investors, even in the equity tranches) who got into booms weren't hurt too badly if they were geographically diversified or didn't go all-in with the skeeziest originators or local bankers who were big RE promoters of marginal development. -- downloaded pdf to Note
paper  Fed  capital_markets  banking  housing  securitization  GSEs  mortgages  US_economy  real_estate  financial_regulation  leverage  risk  maturity_transformation  interest_rates  monetary_policy  financial_stability  macroprudential_regulation  consumer_protection  rating_agencies  institutional_investors  downloaded  EF-add 
october 2014 by dunnettreader
Bianca De Paoli and Anna Lipinska - Capital Controls: A Normative Analysis | FRBNY Staff Reports Number 600 - February 2013
Countries' concerns about the value of their currency have been studied and documented extensively in the literature. Capital controls can be--and often are--used as a tool to manage exchange rate fluctuations. This paper investigates whether countries can benefit from using such a tool. We develop a welfare-based analysis of whether (or, in fact, how) countries should tax international borrowing. Our results suggest that restricting international capital flows through the use of these taxes can be beneficial for individual countries, although it would limit cross-border pooling of risk. The reason is because, while consumption risk-pooling is important, individual countries also care about domestic output fluctuations. Moreover, the results show that countries decide to restrict the international flow of capital exactly when this flow is crucial to ensure cross-border risk sharing. Our findings point to the possibility of costly "capital control wars" and thus to significant gains from international policy coordination. -- enfin! We're making progress in clearing away the accumulated layers of free market ideology. Not sure about the likelihood of "capital control wars" so have to read the thing to see if their global cross-border risk-pooling ("consumption risk-pooling? ) is a significant "common good" for anybody other than financial institutions or the beneficiaries of windfall surpluses like Saudi petrodollars that need recycling. Downloaded pdf to Note
paper  Fed  international_political_economy  international_finance  global_economy  global_imbalance  global_governance  capital_flows  FX  FX-misalignment  emerging_markets  hot_money  contagion  capital_controls  FDI  debt  macroeconomics  central_banks  FX-rate_management  monetary_policy  downloaded  EF-add 
october 2014 by dunnettreader
Gauti Eggertsson and Marc P. Giannoni - The Inflation-Output Trade-Off Revisited | FRBNY Staff Reports Number 608 - May 2013
A rich literature from the 1970s shows that as inflation expectations become more and more ingrained, monetary policy loses its stimulative effect. In the extreme, with perfectly anticipated inflation, there is no trade-off between inflation and output. A recent literature on the interest-rate zero lower bound, however, suggests there may be some benefits from anticipated inflation when he economy is in a liquidity trap. In this paper, we reconcile these two views by showing that while it is true, at positive interest rates, that inflation loses its stimulative effects as it becomes better anticipated, the opposite holds true at the zero bound. Indeed, at the zero bound, the more accurately the public anticipates inflation, the greater is the expansionary effect of inflation on output. This leads us to revisit the trade-off between inflation and output and to show how radically it changes in the face of demand shocks large enough to bring the economy into a liquidity trap. Instead of vanishing once inflation becomes anticipated, the trade-off between inflation and output increases substantially and may become arbitrarily large. In such cases, raising the inflation target in a liquidity trap can be very stimulative. -- downloaded pdf to Note
paper  Fed  economic_theory  macroeconomics  monetary_policy  countercyclical_policy  inflation  inflation-expectations  rational_expectations  ZLB  Phillips_curve  recessions  stagnation  downloaded  EF-add 
october 2014 by dunnettreader
Tobias Adrian and Nellie Liang - Monetary Policy, Financial Conditions, and Financial Stability | Federal Reserve Bank of New York - Staff Reports Number 690 - September 2014
In the conduct of monetary policy, there exists a risk-return trade-off between financial conditions and financial stability, which complements monetary policy’s traditional trade-off between inflation and real activity. The trade-off exists even if monetary policy does not target financial stability considerations independently of its inflation and real activity goals, because risks to future financial stability are increased by the buildup of financial vulnerabilities from persistent accommodative monetary policy when the economy is close to potential. We review monetary policy transmission channels and financial frictions that give rise to this trade-off between financial conditions and financial stability, within a monitoring program across asset markets, banking firms, shadow banking, and the nonfinancial sector. We focus on vulnerabilities that affect monetary policy’s risk-return trade-off, including 1) pricing of risk, 2) leverage, 3) maturity and liquidity mismatch, and
4) interconnectedness and complexity. We also discuss the extent to which structural and time-varying macroprudential policies can counteract the buildup of vulnerabilities, thus mitigating monetary policy’s risk-return trade-off. -- downloaded pdf to Note
paper  Fed  US_economy  macroeconomics  financial_system  monetary_policy  financial_stability  macroprudential_policies  macroprudential_regulation  money_market  capital_markets  banking  shadow_banking  NBFI  investors  institutional_investors  credit  risk_premiums  leverage  money_supply  monetarism  interest_rates  business_cycles  demand-side  investment  consumer_demand  open_market_operations  downloaded  EF-add 
october 2014 by dunnettreader
International Banking Research Network | Home (on NY Fed site)
The International Banking Research Network (IBRN) brings together central bank researchers from around the world to analyze issues pertaining to global banks. It was established in 2012 by Austrian, German, U.S., and U.K. researchers who saw a need for joint analysis of key questions, such as the role of cross-border banking in the transmission of financial shocks. The group has now expanded to include economists and analysts from a broad group of central banks, as well as the Bank for International Settlements and the International Monetary Fund. -- links to their research work and resources on banking, international finance, regulatory matters. Interesting it's not done under BIS auspices - has both BIS and IMF participation, but not World Bank or Financial Stability Board?
website  international_finance  banking  cross-border  financial_regulation  banking-universal  central_banks  financial_crisis  liquidity  leverage  contagion  shadow_banking  NBFI  capital_markets  money_market  monetary_policy  capital_adequacy 
october 2014 by dunnettreader
Philip Pilkington - Endogenous Money and the Natural Rate of Interest - Working Paper No. 817 | Levy Economics Institute - September 2014
Endogenous Money and the Natural Rate of Interest: The Reemergence of Liquidity Preference and Animal Spirits in the Post-Keynesian Theory of Capital Markets -- Since the beginning of the fall of monetarism in the mid-1980s, mainstream macroeconomics has incorporated many of the principles of post-Keynesian endogenous money theory. This paper argues that the most important critical component of post-Keynesian monetary theory today is its rejection of the “natural rate of interest.” By examining the hidden assumptions of the loanable funds doctrine as it was modified in light of the idea of a natural rate of interest — specifically, its implicit reliance on an “efficient markets hypothesis” view of capital markets — this paper seeks to show that the mainstream view of capital markets is completely at odds with the world of fundamental uncertainty addressed by post-Keynesian economists, a world in which Keynesian liquidity preference and animal spirits rule the roost. This perspective also allows us to shed new light on the debate that has sprung up around the work of Hyman Minsky, calling into question to what extent he rejected the loanable funds view of financial markets. When Minsky’s theories are examined against the backdrop of the natural rate of interest version of the loanable funds theory, it quickly becomes clear that Minsky does not fall into the loanable funds camp. -- Program: Monetary Policy and Financial Structure -- Related Topic(s): Capital markets Financial economics Financial market theory Macroeconomics Monetary economics Monetary theory
paper  economic_theory  intellectual_history  20thC  21stC  macroeconomics  monetarism  Post-Keynesian  money  interest_rate-natural  liquidity  capital_markets  EMH  monetary_policy  monetary_theory  banking  NBFI  savings  investment  investors  financial_system  finance_capital  financial_crisis  central_banks  uncertainty  Keynes  Minsky  downloaded  EF-add 
october 2014 by dunnettreader
Charles Evans - Patience Is a Virtue When Normalizing Monetary Policy | Federal Reserve Bank of Chicago - September 2014
As I think about the process of normalizing policy, I conclude that today’s risk-management calculus says we should err on the side of patience in removing highly accommodative policy. We need to solidify our confidence that our ultimate exit from the zero lower bound will occur smoothly — and in a way that sustains our escape from it. A corollary to this is we should not shy away from policy prescriptions that generate forecasts of inflation that moderately overshoot our 2 percent target for a limited time. Such a policy strategy more properly balances expected costs and benefits. And it would leave me with much more confidence that inflation will not stall out below target once we start raising rates. I agree with Atlanta Fed President Lockhart in thinking that we ought to be “whites of their eyes” inflation fighters. The last thing we want to do is regress back into the ZLB. Indeed, such a relapse would be a sign there was something else going on that was preventing the economy from being as vibrant as we thought possible. To summarize, I am very uncomfortable with calls to raise our policy rate sooner than later. I favor delaying liftoff until I am more certain that we have sufficient momentum in place toward our policy goals. And I think we should plan for our path of policy rate increases to be shallow in order to be sure that the economy’s momentum is sustainable in the presence of less accommodative financial conditions. '- downloaded pdf to Note
US_economy  Fed  monetary_policy  unemployment  inflation  Phillips_curve  interest_rates  Labor_markets  wages  deleverage  financial_system  QE  Great_Depression  Eurozone  central_banks  downloaded  EF-add 
october 2014 by dunnettreader
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