|
Monetary Policy
A Category Archive (83 entries)
|
|
October 12, 2009
Finance: stocks, options, etc.
Arnold Kling
In a comment on this post, Bryan asked whether I should not be betting on treasury-indexed securities. I'll answer that one below the fold. What I have been thinking about is this. 1. In general, I do not think that... MORE
October 11, 2009
Macroeconomics
Arnold Kling
Gap-based theories of inflation were badly discredited in the 1970s. That is James Bullard. Pointer from WSJ real time economics. To the Krugmans and DeLongs of the world, it is intuitively obvious that with unemployment approaching 10 percent we... MORE
October 9, 2009
Macroeconomics
Arnold Kling
Here. after July 2008 there were many other indicators that money was far too tight. About this time the dollar began rising sharply against the euro; and commodity prices began a sharp decline. Real interest rates rose from less than... MORE
October 7, 2009
Monetary Policy
Arnold Kling
From his own blog I have a very unconventional way of thinking about the monetary transmission mechanism. A monetary shock is essentially a change in the future path of the money supply relative to velocity, in other words, a change... MORE
October 3, 2009
How does monetary policy work? Think of it this way: Fiscal policy adds or subtracts government liabilities. Monetary policy swaps government liabilities.... MORE
September 30, 2009
Macroeconomics
Arnold Kling
A commenter asks how I reconcile my assertion that money is a store of vaue with my view that macroeconomics should not emphasize the role of money as a store of value. It is only the second view--that money is... MORE
September 29, 2009
Macroeconomics
Arnold Kling
Josh Hendrickson and a reader raise interesting questions.... MORE
Macroeconomics
Arnold Kling
Thanks to Mark Thoma for keeping the debate going. In a defense of what Paul Krugman would call Dark Age Macroeconomics, David Beckworth unleashes that most medieval of weapons, the dreaded Vector Autoregression. More on that below the fold. Also... MORE
September 27, 2009
Macroeconomics
Arnold Kling
I have been making the following claims about macro.... MORE
Monetary Policy
Bryan Caplan
Milton Friedman famously argued that "money matters," but he had a caveat: Money matters with long and variable lags. Over at Cato Unbound, Sumner suggests that even Friedman was far too Klingian:Most economists assume that interest rates or the money... MORE
September 25, 2009
Macroeconomics
Arnold Kling
Read the whole thing. He likes the Recalculation story, which he points out he articulated last December. But he doesn't really buy my bizarre monetary theory. He writes, "I see the Fed as controlling nominal gdp but not always real... MORE
September 24, 2009
Macroeconomics
Arnold Kling
Bill Woolsey writes, it is not difficult to see that a large shift in the composition of demand would result in larger shifts in resource utilization, higher structural unemployment, and slower growth in the productive capacity of the economy. For... MORE
September 23, 2009
Macroeconomics
Arnold Kling
Bryan asks, Could the central bank hit a 20,000% nominal growth target, plus or minus 1000%? No. Certainly not next quarter. Maybe it come close if it aimed for such a target in 2014. Consider two thought-experiments, one involving elves... MORE
Monetary Policy
Bryan Caplan
In response to my criticism, Arnold writes:I do not think that central banks control nominal GDP any more tightly during a hyperinflation than at other times. That is, in normal times, if nominal GDP wants to grow at a 5... MORE
September 22, 2009
Macroeconomics
Arnold Kling
Before I respond to Bryan's comments, let me first recommend the two Scott Sumner papers that he mentions. This paper develops a theory that cultural values drive economic policy, which in turn drives economic outcomes. It is an interesting complement... MORE
September 21, 2009
Macroeconomics
Arnold Kling
Jeffrey Rogers Hummel writes, Orthodox monetarists attributed such shocks to declines in the rate of monetary growth, whereas traditional Keynesians blamed declining autonomous expenditures. Both of these sources are captured in the well known equation of exchange: MV = Py,... MORE
September 11, 2009
Monetary Policy
David Henderson
And celebrity is no shield against Fed excommunication. Paul Krugman, in fact, has gotten rough treatment. "I've been blackballed from the Fed summer conference at Jackson Hole, which I used to be a regular at, ever since I criticized him,"... MORE
September 9, 2009
Monetary Policy
David Henderson
As noted in my previous post on this, Tyler Cowen and I have converged: we agree that Bernanke's and Friedman's views on the causes of the Great Depression differed and that, although there is some ambiguity, there is no clear... MORE
September 8, 2009
Political Economy
Arnold Kling
He writes, an audit of its monetary policies by the GAO -- which, remember, works for Congress -- could easily develop into something quite dangerous. Here is a not-so-unlikely hypothetical: sometime in 2010, the Fed, wanting to avoid inflation, will... MORE
September 4, 2009
Monetary Policy
David Henderson
In the back and forth between Tyler Cowen and me, with a lot of heavy hitters commenting, we have actually made progress. I posted the following on August 31: To put it another way, Friedman and Schwartz argued that the... MORE
September 1, 2009
Monetary Policy
Arnold Kling
He needs to clear up some confusion. I think that Penn Bullock, is quite confused about Milton Friedman, monetarism, and the current crisis. In fact, Bullock is so confused that I searched in vain for something to excerpt. On the... MORE
August 31, 2009
Monetary Policy
David Henderson
In my responses (here and here) to Tyler Cowen's posts (here and here) on whether Milton Friedman would have supported the bailout of banks, I let myself be distracted by Tyler's use of the word "pretend." I accused Tyler of... MORE
August 27, 2009
Monetary Policy
David Henderson
On this blog a couple of days ago, I challenged Tyler Cowen on two issues. He responded to both in the comments section of my post and on his own blog today. His responses on both are unsatisfactory. Here's why.... MORE
August 22, 2009
Macroeconomics
David Henderson
On May 18, in discussing Paul Krugman's analogy between a baby-sitting coop and the general economy, I wrote, quoting my Reason review of Krugman's The Return of Depression Economics: But nowhere does Krugman mention that another way to solve a... MORE
August 4, 2009
Monetary Policy
Arnold Kling
I've been away, mostly in Prague (where the big economic question is why so many older buildings have so many fancy details. My answer is that there must have been a very unequal distribution of wealth, so that rich folks... MORE
August 2, 2009
Macroeconomics
Arnold Kling
Tyler Cowen writes, Professor Sumner's views differ from the monetarism of Milton Friedman by emphasizing expectations rather than any particular measure of the money supply. Allow me to expand on the history of monetary thought embedded in that statement.... MORE
July 24, 2009
Monetary Policy
Arnold Kling
A Debate Between Scott Sumner and John Cochrane. Sumner thinks that the Fed can hit a nominal GDP target if it wants to. When I heard Cochrane a while back, he was talking about the high rate of substitutability of... MORE
July 19, 2009
Monetary Policy
David Henderson
In his comment on my previous post about auditing the Fed, Bob Murphy stated that he shared my concerns about the audit movement because he, like me, distrusts Congress. He criticized my view, though, that the Fed is actually more... MORE
July 18, 2009
Book Club
David Henderson
The Congressman I admire most, Ron Paul, is advocating that the Federal Reserve Bank be audited. Is this a good idea? I think there's one obvious plus and there are two less-obvious minuses. The obvious plus is that an organization... MORE
July 14, 2009
Monetary Policy
Arnold Kling
Bryan points to a Scott Sumner's monetarist credo. Think of it as a simplification of the Taylor rule. The Sumner Rule is, if the consensus forecast of nominal GDP growth is below 5 percent, then loosen up. Presumably, if the... MORE
June 26, 2009
Monetary Policy
Bryan Caplan
Contrary to my expectations, Bernanke's been a disaster. At the same time, though, I can't honestly say that his successor will be any better. Why then do I strongly favor firing my former teacher? Accountability. When someone fails as badly... MORE
May 18, 2009
Macroeconomics
David Henderson
This is another in an open-ended series on strengths and weaknesses in Paul Krugman's writing. In a 1999 review of Krugman's The Return of Depression Economics, I wrote: One of Krugman's strengths is his talent for analogies that help readers... MORE
May 13, 2009
Monetary Policy
Bryan Caplan
I just read Bernanke's 2004 piece on "The Great Moderation." It's written by the wise Bernanke I remember, not the embarassment he's become. In hindsight it's tempting to treat Bernanke's analysis as pure delusion. But in the end, I bet... MORE
April 6, 2009
Fiscal Policy
David Henderson
Bob Lucas's talk at the Council on Foreign Relations is well worth reading. Here are some of the nuggets. After pointing out that the forecasted rate of growth of nominal GDP for 2009 is zero percent, he states: So if... MORE
April 4, 2009
Monetary Policy
David Henderson
Economist and economic journalist Susan Lee has written an attack on Alan Greenspan and a review of John Taylor's recent book that is implicitly a response to my defense of Greenspan and review of Taylor's book. You can read both... MORE
March 27, 2009
Monetary Policy
David Henderson
In today's Wall Street Journal is a round-up of views on whether Alan Greenspan caused the housing boom. The lead piece, by me, says that he didn't, for reasons that will be familiar to regular readers of this blog. My... MORE
March 25, 2009
My book review of John Taylor's latest book, Getting Off Track, appeared on Forbes.com yesterday. Two excerpts from my review: Throughout 2007 and 2008, Fed Chairman Ben Bernanke and others in policy-making positions assumed that the problem was that the... MORE
March 13, 2009
Monetary Policy
David Henderson
The latest issue of The Freeman: Ideas on Liberty carries two articles written or co-authored by me. The first, "Was Money Really Easy Under Greenspan?," by Jeff Hummel and me, goes after the view that Greenspan conducted a loose monetary... MORE
March 4, 2009
Economist Jeff Hummel sent out the following to a large e-mail list. I'm reprinting the whole thing here and appending my comments. Jeff's e-mail: Mark-to-market accounting has received a lot of criticism during the current financial crisis. But a recent... MORE
March 2, 2009
Monetary Policy
Arnold Kling
Goodness knows, I don't want to. I still think he owes me a correction--and in fact an apology--in his column for putting in quotation marks an inaccurate, misleading, and distorted version of something I said. But here is Tyler Cowen... MORE
March 1, 2009
Macroeconomics
Arnold Kling
He wants the Fed to do whatever it can to try to get prices headed up rather than down. His best argument: What do we have to lose?: We can get rid of interest on bank reserves (and consider a... MORE
February 25, 2009
Monetary Policy
Arnold Kling
Scott Sumner writes, Many economists simply assume that the current contraction has been caused by the financial crisis. After all, isn't that obvious? Actually, no. For nearly a year after the onset of the financial crisis nominal GDP continued growing... MORE
February 17, 2009
Regulation
David Henderson
Today, the Wall Street Journal published two excellent letters on the mark-to-market regs that banks are under. IMO, too little has been written about this by economists. The second letter tells a horror story; the first makes a constructive suggestion... MORE
February 13, 2009
Economic History
David Henderson
Yesterday, blogger Megan McArdle had an interesting post on Canada. She wrote: Canada is now being held up as a regulatory example to us, but Canada has always been an odd duck--it was also the only major economy in the... MORE
January 26, 2009
Monetary Policy
David Henderson
Monetary economist Jeff Hummel has posted today a detailed exposition of recent Fed policy. The two most interesting things to me are: (1) The money supply is increasing. This fact undercuts one part of the "monetary policy is impotent" view... MORE
January 23, 2009
Monetary Policy
David Henderson
Lots of people lately have been talking about how lousy the dollar is as a store of value. I'll repeat the offer I made in a recent book review in Regulation, in response to an economist's claim that government had... MORE
December 16, 2008
Finance: stocks, options, etc.
Arnold Kling
James Hamilton writes, Will [purchases of mortgage securities and other assets by the Fed] succeed if we just do it on a sufficiently large scale? I'm not at all convinced that it would. Our standard finance models treat interest rate... MORE
December 14, 2008
Macroeconomics
Arnold Kling
He is a leading macroeconomist, and he is out with a serious paper, in which he blames the Fed for excessively low interest rates from 2002-2004. Pointer from James Hamilton, who does not agree. Hamilton writes, I feel he overstates... MORE
December 1, 2008
Monetary Policy
Bryan Caplan
Arcane banking regulations matter, but it's hard to communicate anything about them to a broader audience. Alex Tabarrok rises to the occasion with an elegant analogy: When no interest was paid on reserves banks tried to hold as few as... MORE
Monetary Policy
David Henderson
Early in November, Jeff Hummel and I had a paper published by the Cato Institute in which we defended Alan Greenspan from the critics who claimed that his monetary policy was the primary cause of the current financial crisis. We... MORE
November 24, 2008
Finance: stocks, options, etc.
Arnold Kling
James Hamilton writes The Fed has been trying to sop up the illiquid assets that nobody else wants. But I think what the Fed should be doing is instead acquiring assets of a type that would allow it to quickly... MORE
November 20, 2008
Monetary Policy
Arnold Kling
Suppose that the Federal Funds rate falls to zero. Does that mean that we are in the infamous liquidity trap, in which the Fed is powerless to use open market operations to affect the economy? I think not, and I'm... MORE
November 3, 2008
Monetary Policy
David Henderson
We are not arguing that Greenspan's policies were perfect. Nor should anything that follows be construed as a defense of central banking or of the Federal Reserve. Particularly alarming is the way the lender-of-last-resort function has been expanding the moral-hazard... MORE
October 29, 2008
Finance: stocks, options, etc.
Arnold Kling
Brad DeLong says I am wrong about his views of Greenspan. I now think he was wrong not to move aggressively to curb the housing bubble of the 2000s. But I think all in all he did a very good... MORE
October 28, 2008
Finance: stocks, options, etc.
Arnold Kling
Brad DeLong writes, The current financial crisis has its roots in Greenspan's decision to keep interest rates very low in 2002 and 2003 to head off the danger of a deflation-induced double-dip recession, and his subsequent decision that the costs... MORE
October 22, 2008
Austrian Economics
Arnold Kling
In response to my post on the porn that is modern macro, readers naturally asked me for alternatives.... MORE
October 7, 2008
Monetary Policy
Bryan Caplan
New Keynesian economics has been around for so long that it's hard to remember what Old Keynesian economics was like. Here are two quotes (via Garett Jones via Robert Hetzel) from Samuelson to remind us of the days when... MORE
September 9, 2008
Monetary Policy
Bryan Caplan
Princeton has re-released Friedman and Schwartz's The Great Contraction. Ben Bernanke's speech in honor of Friedman's 90th birthday is now the book's epilogue. The highlight, for me, is Bernanke explaining how banks dealt with panics before the Fed existed:Before the... MORE
August 7, 2008
Monetary Policy
Bryan Caplan
Hummel follows up on my post on the (relative) efficiency of modern central banks:Here are my three reasons, given somewhat sporadically in my lecture, for the better performance of central banks in developed countries since the 1980s: 1. Highly developed... MORE
August 4, 2008
Monetary Policy
Bryan Caplan
Two weeks ago, I relayed the following story:Yesterday at the FEE seminar, I got to hear the excellent Jeff Hummel thoroughly debunk the crazy Rothbardian view that fractional reserve banking is "fraudulent." It was a fun (and funny) lecture, but... MORE
July 18, 2008
Monetary Policy
Bryan Caplan
Yesterday at the FEE seminar, I got to hear the excellent Jeff Hummel thoroughly debunk the crazy Rothbardian view that fractional reserve banking is "fraudulent." It was a fun (and funny) lecture, but the target was too easy. So during... MORE
June 18, 2008
Monetary Policy
Bryan Caplan
Arnold agrees with my causal analysis of the dollar and gas prices, but doesn't think I should blame the Fed. Well, let me put it this way: If Bernanke were to publicly say, "Federal Reserve policies are the main cause... MORE
March 17, 2008
Monetary Policy
Arnold Kling
In today's econtalk podcast, Tyler Cowen and Russ Roberts discuss monetary theory and monetary policy. It is a wide-ranging discussion, covering several weeks worth of an intermediate macro course. If you are not familiar with the subject, you might have... MORE
March 10, 2008
Monetary Policy
Bryan Caplan
I just read Murray Rothbard's The Case Against the Fed, and it brought back to mind my youthful exposure to his whole approach to monetary economics. (See here, here, and here for more). My mature view is that there are... MORE
August 24, 2007
Monetary Policy
Arnold Kling
John Tamny writes, Gold, the single best market indicator of a currency's true value, hit a high of $740 in the summer of 2006, and its 12 percent fall since then neatly foretold the troubles borrowers and lenders are experiencing... MORE
January 6, 2006
Monetary Policy
Arnold Kling
My latest essay. Kuttner has apparently missed the point of the concept of a natural rate of unemployment, which is that the unemployment rate should not be a "target for monetary policy." What Friedman means by the term natural unemployment... MORE
October 24, 2005
Monetary Policy
Arnold Kling
I agree with Bryan that Bernanke is an excellent choice. He is knowledgable and articulate--just the other day I referred econlog readers to Bernanke's overview of recent productivity developments. Ben was a year ahead of me in grad school at... MORE
June 12, 2005
Monetary Policy
Bryan Caplan
I'm not convinced that mild deflation is anything to worry about. It didn't seem to hold back the U.S. economy during the post Civil War, pre-Fed era. But suppose you were worried about it. What could be done to reverse... MORE
July 16, 2004
Monetary Policy
Arnold Kling
Brad DeLong argues, There is a 5m-worker gap between household-survey employment today and what it would be if the employment-to-population ratio were at its average level for 2000. This suggests that we are extraordinarily far from anything that could be... MORE
June 9, 2004
Supply-side Economics
Arnold Kling
I decided to put my thoughts into a longer essay. When Ronald Reagan defeated Carter's re-election bid, "incomes policies" were a proven failure. Notwithstanding Milton Friedman's comments quoted above, by 1980 it took a lot less courage to stand by... MORE
May 27, 2004
Monetary Policy
Arnold Kling
If interest rates are the measure of monetary policy, then we have already seen a strong tightening. For example, since late March, the yield on the 10-year Treasury note -- a critical interest rate since it's the basis for mortgage... MORE
January 28, 2004
Finance: stocks, options, etc.
Arnold Kling
Tyler Cowen recommends two articles by Perry Mehrling on the relationship between the theory of finance and monetary theory/macroeconomics. One of the articles is a nice summary of the work of Fischer Black. What Black did was to conceive of... MORE
October 14, 2003
Macroeconomics
Arnold Kling
In this essay, I summarize what I have been reading about the Great Depression and its implications for today. The Depression certainly was an era of displacement. In fact I have borrowed the very term "displacement" from the late economic... MORE
October 1, 2003
Regulation and Subsidies
Arnold Kling
Posting here will be infrequent until later in October. Meanwhile, here are some links that may be of interest. Is the insecurity of Microsoft software an externality that should be regulated or taxed? An example of professional licensing as rent-seeking... MORE
August 19, 2003
Monetary Policy
Arnold Kling
Milton Friedman describes the consensus in macroeconomics as having moved in his direction. That Keynesian vision was thoroughly discredited by experience in the '70s and '80s. It has since been replaced by what has become known as New Keynesian Economics,... MORE
July 1, 2003
Monetary Policy
Arnold Kling
Graham Turner claims to offer magical monetary manipulations. A year and a half after the Japanese government introduced its first fiscal stimulus, the yield curve (10-year Japanese government bond yields minus the discount rate) had steepened by nearly 2 percentage... MORE
June 17, 2003
Macroeconomics
Arnold Kling
Robert Solow favors common sense over exotic theory. On the concerns about deflation in the U.S., he writes, If you look at the hundreds of prices that are tracked by the Bureau of Labour Statistics as elements of the consumer... MORE
May 30, 2003
Monetary Policy
Arnold Kling
The comments on the Liquidity Trap or Statism Trap thread have been interesting. I want to respond to a couple of issues that were raised. First, D-squared pointed out that Krugman has written about the liquidity trap in Brookings Papers,... MORE
May 28, 2003
Supply-side Economics
Arnold Kling
In this essay, I take issue with Paul Krugman's claim that the liquidity trap is relevant to Japan and the United States. Krugman has learned the wrong lessons. He thinks that the bank bailouts are a good thing, that Japan's... MORE
May 9, 2003
Macroeconomics
Arnold Kling
Continuing the discussion that began with the thread Liquidity Trapped?, we can add opinions from Richard Berner of Morgan Stanley and Victor Canto of the Cato Institute. Canto writes, The data make a compelling case that we are on the... MORE
May 7, 2003
Macroeconomics
Arnold Kling
The threat of deflation and/or a liquidity trap has been discussed in a number of places recently. Columnist Robert J. Samuelson writes, Global demand remains weak; surplus capacity discourages new investment; gluts depress prices. Deflation could be dangerous: Lower prices... MORE
April 22, 2003
Optimum Currency Areas
Arnold Kling
Martin Feldstein explains why Europe is not an optimum currency area, even though the United States is one. First, American employees move within the country when demand is relatively weak in a particular region, facilitated by a common language and... MORE
March 7, 2003
Macroeconomics
Arnold Kling
Morgan Stanley's Steve Roach writes about the timidity of the European Central Bank. Incrementalism doesn’t work in combating deflation. That was one of the key lessons that the research staff of the Federal Reserve drew in a widely noted paper... MORE
Return to top
|
