I had the privilege of attending a conference in St. Louis this week on Monetary Policy under Uncertainty at which I presented a paper on the response of interest rates to changes in the fed funds target. One of the interesting themes that came up in some of the other papers concerned whether the public’s interests are best served when monetary policy follows mechanical rules as opposed to responding to events in a discretionary way. Here I report on some of the discussion of this issue from the conference.
Monthly Archives: October 2007
The Debt-to-GDP Outlook in Plausible Scenarios
In updating a graph of the projected debt-to-GDP ratio, I was only slightly surprised to see that the out-years (still) look pretty grim.
Deteriorating lending standards
What is the significance of the fact that the most recently issued subprime mortgages are the ones that are running into the biggest problems?
So Much for that Balanced Budget…
From Bloomberg, an anodyne to happy talk:
Superconduit
The Wall Street Journal describes it as a “superconduit”,
the New York Times refers to it as a “super-SIV”,
and the Washington Post is calling it a
“Master-Liquidity Enhancement Conduit”. Whatever you call it, does it make any sense?
The World Inverted: Does It Matter That Yield Curves Are Sloping Downward?
In glancing at Table 4 the last issue of the Economist (sub. req.), I was surprised that so many countries had downward sloping yield curves. Should we worry?
Inferring market expectations from changes in fed funds futures prices
I recently completed a new research paper studying how interest rates of different maturities change with market expectations of what the Fed is going to do next.
IMF World Economic Outlook on Managing Large Capital Inflows
The IMF has just released several chapters of its semi-annual World Economic Outlook. One chapter is entitled “Managing Large Capital Inflows”.
Speculation and fundamentals in oil prices
Knzn asks about the significance of the shift from contango to backwardation in the term structure of crude oil futures. I think one thing it signifies it that some OPEC spokesmen are simply blowing smoke.
What’s a “Strong Dollar”?
I used to wonder about the use of this term a lot, at least in the context of government pronouncements. Here’s my answer. First, the use of the term in context. From Bloomberg:
Weak Dollar Boosts Growth Without Fueling Inflation (Update1)By Matthew Benjamin and Vivien Lou Chen
Oct. 8 (Bloomberg) — Treasury Secretary Henry Paulson, whose signature appears on every new dollar bill, may find the weak currency with his name on it helps the U.S. economy more than the strong one he publicly endorses.