A Failure to Act: Fed Policy and Interest Rates

Is the Fed responsible for the pernicious low-interest rate environment? Yes, but not for the reasons you think. I explain why in a new National Review article: While this absolves the Fed of direct responsibility for the low-interest-rate environment, it does not absolve it for its indirect influence. Through its control of the monetary base, the Fed can […]

‘DSGE + Financial Frictions = Macro that Works?’

This is a brief follow-up to this post from Noah Smith (see this post for the abstract to the Marco Del Negro, Marc P. Giannoni, and Frank Schorfheide paper he discusses): DSGE + financial frictions = macro that works?: In my last post, I wrote: So far, we don’t seem to have gotten a heck of a lot […]

April Was A Rough Month For Spending & Income

Consumer spending and disposable personal income declined last month, the US Bureau of Economic Analysis reports. That’s a worrisome sign because the annual rate of growth for both indicators has been trending lower for two years. The margin of comfort, in other words, is wearing thin, and today’s report doesn’t offer much in the way of […]

Reframing the Debate: Not That Most Americans Have Been Living Beyond Our Means, But Our Means Haven’t Kept Up Because of Widening Inequality

Even as the economy slowly recovers from the worst downturn since the Great Depression, government-haters and deficit-hawks are sticking to their same story: Americans have lived beyond their means and must now learn to live within them. The reality is quite different: The means of most Americans haven’t kept up with what the economy could […]

Evaluating 3 Bullish Arguments

These are indeed interesting times that we live in.  As the markets elevate higher on the back of the global central bank interventions it is important to keep in context the historical tendencies of the markets over time.  It is not uncommon at major market peaks to see“irrational exuberance” begin to grip the markets.  In March […]

Latest US GDP Numbers Confirm Consumer-Led Expansion but Government and Exports were Weaker than Previously Thought

The second revision of GDP data released today by the Bureau of Economic Analysis confirmed that the U.S. economy expanded at a moderate 2.4 percent annual rate in the first quarter of 2013. The figure for overall growth was almost unchanged from the 2.5 percent of last month’s advance estimate. However, there were significant changes […]

Turning Japanese: The Global Economic Trajectory?

In 1980, the English pop band The Vapours had a hit with their song Turning Japanese. Against a background of a simplevaguely Oriental guitar riff, the repetitive chorus intoned: I am turning Japanese I think I am turning Japanese I really think so. In the course of an interview, songwriter David Fenton explained that the song concerned the clichés about angst and youth and […]

Paul Tucker Speech on Resolution

On 20 May 2013, Paul Tucker, Deputy Governor of Financial Stability at the Bank of England gave a speech entitled “Resolution and future of finance” at the INSOL International World Congress in the Hague. Within the wider context of discussing solutions to the problem of “too big to fail”, the speech gives a useful summary […]

On A Roll: Sustaining Strong Growth in Latin America

Latin America has enjoyed strong growth during the last decade, with annual growth averaging 4½ percent compared with 2¾ in the 1980s and 1990s. What is behind this remarkable economic performance and will this growth be sustainable in the years ahead? Our recent study (see also our working paper) looks at the supply-side drivers of growth for a large […]

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