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Recent Posts
- Are ECB’s Greek bond purchases really irrelevant for the private sector?
- Is Greg getting bailed out by his rich uncle?
- Taylor legislation? Rules versus discretion misunderstood
- Partisanship and dismal economics blogging
- Chris Auld’s 18 signs
- The case for negative nominal interest rates and how to attain them: Revisiting the Buiter-Eisler approach
- No Negative Rates in Euroland (yet)
- Reinhart and Rogoff’s coding mistake: Much Ado About Nothing
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(Needless to say, I do not necessarily agree with them or endorse them.)
Category Archives: Economists
Taylor Rules on the Taylor Rule
The rule for nominal interest rate setting that John Taylor proposed in his 1993 paper “Discretion versus Policy Rules in Practice“, Carnegie-Rochester Conference Series on Public Policy 39, 195-214, has had an enormous influence in the macroeconomics profession. It is safe to say that numerous economists, practitioners and academics alike, since that paper have evaluated monetary policymaking using the Taylor rule as some kind of reference point. Empirically, a plethora of papers have estimated coefficients of Taylor-type rules for different countries during different periods. Theoretically, paper after paper on monetary policymaking adopt some form of the Taylor rule as a default specification of monetary policymaking (even undergraduate text books routinely … Continue reading
Temporary and Permanent Ricardian Confusion: Going Comfortably Numb
Spurred by the heated debates about the need for fiscal stimulus in the US, the issue of Ricardian Equivalence has taken center stage in the economic blogging sphere recently. While it is an impossible task to identify any exact line of events on the net (and possible also irrelevant), this round appears to have been initiated by an article by Justin Yifu Lin (pdf), Chief Economist of the World Bank, who got criticized here by a balanced Antonio Fatás. Fatás notes, among other things, that Lin’s fears that fiscal stimulus could be caught by the “Ricardian trap” (i.e., neutralized by offsetting increased private savings) are unwarranted. While Lin’s endorsement of … Continue reading
The Fed and the ECB: “Spurious Bedfellows”
Some days ago, I wrote about an interesting post by Gavin Davies on his Financial Times blog, where he argued that European monetary policy, through the actions of the German Bundesbank and now the European Central Bank, follows the US Federal Reserve’s interest rate decisions with some delay. An observation leading him to label the FED and ECB “strange bedfellows”. The data behind the argument is seen in the following figure: The Federal Reserve’s policy intentions are throughout the period measured by the target value for the Federal Funds Rate (formally, this time series is discontinued as of December 2008, and I show the upper value of the 0-0.25% target … Continue reading
Posted in Economists, Macroeconomics, Monetary policy
Tagged European Central Bank, Federal Reserve, Gavin Davies, German Bundesbank, Olumuyiwa Awe, Spurious correlation
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Sveriges Riksbank raises rates again; Svensson dissents again
Yesterday, Sveriges Riksbank (central bank of Sweden) announced that it raised the main policy rate to 1.5%. This is the fifth consecutive 25 basis point increase since last summer. It also marks the twelfth time in a row that Executive Board Member, and Deputy Governor of the Bank, Lars Svensson dissents by voting for a looser stance (in this case he advocated an unchanged rate). The last time he agreed with an interest rate decision was in February 2009. The Inflation-Targeting Riksbank makes all this information publicly available on their web site (see the voting records here). This high degree of transparency is not uncommon among inflation targeting central banks, … Continue reading
Mankiw on Obama’s weak sports analogy
Most are aware that N. Gregory Mankiw is an outstanding economist and economics educator. So this post will merely be a recommendation of his recent article in the New York Times: “Emerging Markets as Partners, Not Rivals“. Inspired by Barack Obama’s recent State of the Union address, where the US president multiple times noted that the US should “win the future”, Mankiw obviously has felt a need to explain that economics is generally not a zero-sum game. As usual, he does an excellent job!
Posted in Economists, Macroeconomics, Trade
Tagged Barack Obama, Emerging markets, N. Gregory Mankiw
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No Weber after Trichet: Politics 1, Treaty 0
Jean-Claude Trichet steps down as President of the European Central Bank this October. So much is certain, if things go according to the statutes of the ECB. Things do not necessarily go according to the statutes, but it seems a certain bet that Trichet will step down as planned. A question of much concern is who will succeed him? There has been much speculation that the next President would have to come from Germany. (A common conclusion derived from the hypothesis that the Germans and French battle over ECB leadership and influence, with the first President Duisenberg, a Dutch promising to step down after a half term, being a compromise … Continue reading
Posted in Economists, Monetary policy
Tagged Axel Weber, Central bank governance, Central bank independence, European Central Bank, European Union, Jean Claude Trichet, Treaty on European Union
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100 Years of the American Economic Review: The Top 20 Articles
It has been noticed by many already, but I thought I would “advertise” this Top 20 as well. In celebration of the 100 year anniversary of one of the economics profession’s top journals, a group of seasoned economists was asked to pick 20 of the best articles published so far in the American Economic Review. Most choices feel sort of self-evident and unavoidable when you see the list, and the group also notes that they quickly converged on 15 articles. The oldest paper is from 1928 (the birth of the Cobb-Douglas production function), and the youngest is from 1981 (Shiller’s paper on stock-price volatility). It is interesting that more than … Continue reading
Posted in Economics, Economists
Tagged American Economic Review, Top 20 articles
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The Importance of Capital Theory? Supply-side Economics With a Vengeance
From Brad DeLong’s weblog (where it came from Mark Toma), I was directed back to Paul Krugman’s NYT blog, where he comments on a 2008 blog post by Robert P. Murphy on the Austrian capital theory. I am not an expert on Austrian economics, so it is interesting to read a piece by one I guess is a prominent figure within that school. My guess is based on visiting the web-site mises.org, where one sees that Murphy is/or has been teaching at the Ludwig von Mises Institute, and I reckon they wouldn’t let him do that, if he wasn’t somewhat representative of the Austrian school. Also, on his own blog, … Continue reading
