Last week I participated in a conference hosted by the Federal Reserve Bank of Boston, at which I discussed the new lending programs and asset acquisitions pursued by the Federal Reserve over the last two years. Previously I shared with Econbrowser readers empirical evidence on the effects these targeted liquidity operations seem to have had. Below I reproduce my remarks from the conference on the underlying motivation for using such measures, in which I suggested that the critical question is what was the underlying cause of the financial stress to which the Fed was responding. I distinguished between two possible interpretations of how the financial crisis arose.
Author Archives: James_Hamilton
Unemployment and inflation
Does high unemployment mean that there’s nothing to worry about in terms of inflation?
No L
Real output grew significantly this quarter. Will employment follow?
Targeted liquidity operations
During the last two years, the Federal Reserve responded to problems in the financial markets through what I have described as monetary policy using the asset side of the Fed’s balance sheet, replacing its traditional holdings of Treasury securities with a variety of new lending programs and alternative assets. I’ve been taking a look at what effect these operations seem to have had on the problems they were designed to address.
Working harder and harder to keep oil production from falling
The challenges for private oil companies to increase oil production are pretty daunting.
Will stimulating nominal aggregate demand solve our problems?
In which I join the ongoing debate on how much we should expect fiscal and monetary stimulus to accomplish.
Not much of a V
The latest auto and employment numbers paint a picture of an economic recovery that remains tepid and potentially fragile.
Home prices stabilized, but…
The S&P/Case-Shiller home price indices registered another month of increase in July. That’s a critical bit of favorable news, since continued declines in home prices would mean further increases in default rates and new stresses on financial institutions.
Federal Reserve reverse repurchases
Here I offer some thoughts on Bloomberg’s account that the Fed has made inquiries with its dealers about the feasibility of a significant increase in the Fed’s reverse repo operations.
Links for 2009-09-25
Tim Duy worries that some FOMC members are overestimating the inflation risk.
Arnold Kling proposes a mackerel theory of value.
The discussion at Cato of monetary policy continues.