Is the Output Gap Showing

In a recent speech, Atlanta Fed President Dennis Lockhart laid out two competing risks to the inflation outlook. On one side, the usual measures of economic slack (output gap measures) suggest that there is so much excess production capacity that prices and wages are under great—and increasing—disinflationary pressure. All this is occurring at a time […]

Second Quarter GDP Revised Up

The second quarter GDP numbers wrongfooted some City economists, who wrongly thought that exceptionally weak business investment figures for the quarter, released on Thursday, would produce a downward revision to the figures. Top marks to Ben Broadbent and Kevin Daly of Goldman Sachs, who wrote this on Thursday: “Note that this number has NO bearing […]

Bailout Profits? Don’t Make Me Laugh!

“The government has taken profits of about $1.4 billion on its investment in Goldman Sachs, $1.3 billion on Morgan Stanley and $414 million on American Express. The five other banks that repaid the government — Northern Trust, Bank of New York Mellon, State Street, U.S. Bancorp and BB&T — each brought in $100 million to […]

Uncovering the Monetary Policy Rule in India

India’s central bank, the Reserve Bank of India (RBI), has an unenviable task. It is not really independent, it has multiple objectives (not all of its own making), it has to deal with a country that is extremely heterogeneous in terms of economic structures and development levels, and it often lacks good data for its […]

Beware Authoritative “Inside Washington” Sources Who Say The Public Option is Dead

Washington, D.C. is an echo chamber in which anyone who sounds authoritative repeats the conventional authoritative wisdom about the “consensus” of inside opinion, which they’ve heard from someone else who sounds equally authoritative, who of course has heard it from another authoritative source. Follow the trail to its start and you often find an obscure […]

Experimenting with Negative Interest Rates

As the world’s original central bank, it’s fitting that Sweden’s Riksbank has become the first to breach the zero-bound line by lowering one of its key interest rates to negative 0.25% since July 8. The drop in the price of money below zero is reportedly the first of its kind. The dip refutes the idea […]

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