Was their rise caused by “bad policies”? And why are they falling now?
Author Archives: Menzie Chinn
“Rethinking Macro Policy II: First Steps and Early Lessons”
That’s the title of an IMF conference taking place starting tomorrow (April 16-17). The program is below, and the live webcast will be available here (and follows up on a 2011 conference on the same subject).
Five years into the crisis, the contours of the macroeconomic policy of the future are only slowly coming into focus. From macroeconomic to financial stability, policy makers have realized that they have to watch many targets. They have also realized that they have potentially many more instruments at their disposal, from macro prudential tools to unconventional monetary policy. But how to map instruments to targets remains very much a work in progress. — Olivier Blanchard
Some New Estimates of Japanese Trade Elasticities
One component of Abenomics is a vigorously expansionary monetary policy. The yen has depreciated substantially as a consequence — as of February, about 20% relative to 2012Q3. One question is how much of an expenditure switching effect this depreciation will induce. In order to examine this question, I have done some quick and dirty econometrics, summarized in this paper.
Currency Wars vs. Currency Spillovers
From Steven Englander (Citibank), “Currency war, BoJ Style” (4/7, not online):
Japan is likely to be labeled as a currency warrior by major Asian trading partners. However, the new BoJ policy has been endorsed by the Fed and IMF and is very G7 compliant, so the BoJ has cover for its policy agenda, despite the aggressiveness of its balance sheet expansion and negative implications for JPY.
Guest Contribution: “Should We Care about Sticky Prices?”
Today we are fortunate to have a guest contribution written by Yuriy Gorodnichenko (UC Berkeley) and Michael Weber (UC Berkeley). It is based upon their paper entitled “Are Sticky Prices Costly? Evidence From The Stock Market”.
This Is Not an Oil Spill
Technically speaking. Update, 4/6: Or maybe it is.
The BoJ’s Kuroda Acts
From Reuters:
Wisconsin, and Her Neighbors: Philadelphia Fed Coincident Indices
From the MacIver Institute, “The Free Market Voice of Wisconsin”:
Teaching Mundell-Fleming, Interest Rate Parity, and the LM Curve
Simon Wren-Lewis’s post has sparked vigorous discussion [1] [2] (and rejoinder) of whether the teaching of Mundell-Fleming, omitting uncovered interest parity, to our undergraduate students is defensible. In addition, he wonders whether it makes sense to use an LM curve, given the absence of a stable money demand curve, and the fact that most advanced country central banks target a policy rate. I think these are good questions for teachers, as well as those who provide advice regarding policy measures.
Guest Contribution: “Is the Federal Reserve Breeding the Next Financial Crisis?”
Today, we are fortunate to have a guest contribution by Ambrogio Cesa-Bianchi and Alessandro Rebucci. It is based upon Does Easing Monetary Policy Increase Financial Instability?. The views expressed in this column are the authors’ and not necessarily those of the institutions with which they are affiliated.