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Channel: monetary policy – Basil Halperin
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Choosing a Fed chair: what does the literature say?

Ben Bernanke’s term as chairman of the Fed ends in January, and it is widely expected that he will not stay on. Speculation has recently heated up over as to who his successor will be. The conventional...

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A simple model demonstrating the Sumner critique

One of the most important ideas to emerge from market monetarist writing in the blogosphere, in my opinion, is the “Sumner critique.” This critique named after Scott Sumner has been worded many...

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Fed independence is important – examples from history

When Larry Summers was still a candidate for Fed Chair, and the econoblogosphere was still debating whether or not he ought to be nominated, it became oddly fashionable to argue that it would be a good...

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Updated Romer and Romer (2004) Measure of Monetary Policy Shocks

I’ve updated the Romer and Romer (2004) series of monetary policy shocks. The main takeaway is this graph of monetary policy shocks by month, since 1969, where the gray bars indicate recession: When...

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Updated Romer and Romer (2008): Or, the FOMC is Still Bad at Forecasting – In...

In 2008, Christina and David Romer published an interesting paper demonstrating that FOMC members are useless at forecasting economic conditions compared to the Board of Governors staff, and presented...

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Thoughts on Secular Stagnation (Eggertsson and Mehrotra 2014)

Some thoughts on Eggertsson and Mehrotra (2014), the first formalization of the “secular stagnation” thesis. Nothing innovative here, I just wanted to collect my thoughts all in one place. Model...

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Using the Solow model to understand why land is important for (the lack of)...

I found an interesting 1970 AER paper that adds land to the Solow model in continuous time and verifies the result, discussed last week, that as the rate of return on capital approaches the growth rate...

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A practical critique of NGDP targeting

Summary: NGDP growth is equal to real GDP growth plus inflation. Thus, under NGDP targeting, if the potential real growth rate of the economy changes, then the full-employment inflation rate changes....

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Would Greece still not have independent monetary policy even if it leaves the...

JP Koning makes the case that even if Greece were to leave the Eurozone and institute a new currency (call it the New Drachma), Athens would still not have independent monetary policy: if households...

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Can the natural rate of interest be negative?

I comment on Josh Hendrickson's interesting post. While it certainly is hard for me to believe that the natural rate of interest could be negative, it's difficult to find a satisfying alternative...

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The Fed’s preferred model says that now is not the time to raise rates

Until very recently – see last month’s WSJ survey of economists – the FOMC was widely expected to raise the target federal funds rate this week at their September meeting. Whether or not the Fed should...

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Monetary misperceptions, food banks, and NGDP targeting

I. Marx vs. Smith and food banks When Heinz produces too many Bagel Bites, or Kellogg produces too many Pop-Tarts, or whatever, these mammoth food-processing companies can donate their surplus food to...

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Reply to Sumner

Scott Sumner has a thoughtful reply to my critique of NGDP targeting from 2015. Allow me to restate my comment from a slightly different perspective, using the Friedman rule. It would be nice if NGDP...

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Fed independence is important – examples from history

When Larry Summers was still a candidate for Fed Chair, and the econoblogosphere was still debating whether or not he ought to be nominated, it became oddly fashionable to argue that it would be a good...

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NGDP targeting and the Friedman Rule

This post continues the discussion from Scott Sumner’s thoughtful reply to my critique of NGDP targeting from 2015. (Note to frequent readers: I previously published a reply to Scott, which I have...

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NGDP futures via blockchain: Market monetarism meets cryptocurrency (And: how...

Scott Sumner has famously proposed that the Fed stabilize monetary policy by pegging nominal GDP futures contracts in such a way to ensure that expectations for nominal income growth remain steady. For...

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