A growing number of observers are starting to conclude that we’re never going to see the rebound in growth rates that many people had anticipated as the U.S. recovers from the Great Recession. Here I comment on a new paper in which Northwestern Professor Robert Gordon explains the basis for his pessimism.
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Category Archives: Federal Reserve
Other perspectives on the new bond market conundrum
Low Long Term Rates to Stay?
As I begin teaching finance in the new semester, I am highlighting the key puzzle of our times, discussed by Jim in his last post, with this graph:
Bond market conundrum redux
As the U.S. economy returns to healthier growth, many of us expected long-term interest rates to return to more normal historical levels. But the general trend has been down since the end of the Great Recession. The 10-year rate did jump back up in the spring of 2013. But during most of this year it has been falling again.
What did quantitative easing accomplish?
Roger Farmer has taken a new look at an issue concerning the Federal Reserve’s program of large-scale asset purchases (referred to in the popular press as “quantitative easing”) that I’ve been discussing on Econbrowser and in my research with University of Chicago Professor Cynthia Wu for some time.
The National Savings Identity, Crowding-Out, and Apocalypse Predicted
Consider this prognostication from 2011:
Americans face the most predictable economic crisis in this nation’s history. Absent reform, the panic ahead is no longer a question of if, but rather when. A deterioration of confidence by investors in government’s ability to pay its bills will drive interest rates up, increasing borrowing costs for government, small businesses and families alike. A vicious cycle of debt will compound upon itself; the available exit options once the crisis hits will be limited; and all will involve pain. (p.59)
Guest Contribution: How Janet Yellen Might Have Responded to the Policy Rules Legislation
Today, we’re fortunate to have Alex Nikolsko-Rzhevskyy, Assistant Professor of Economics at Lehigh University, David Papell and Ruxandra Prodan, respectively Professor and Clinical Assistant Professor of Economics at the University of Houston, as Guest Contributors
Guest Contribution: Taylor Rule Legislation
Today, we’re fortunate to have Alex Nikolsko-Rzhevskyy, Assistant Professor of Economics at Lehigh University, David Papell and Ruxandra Prodan, respectively Professor and Clinical Assistant Professor of Economics at the University of Houston, as Guest Contributors
An Exchange Regarding Asset Price and Inflation Implications of Fiscal and Monetary Policies in the Wake of 2008
This is not the most erudite debate, but it pretty much sums up matters.
Negative interest rates
The European Central Bank announced on Thursday that it is moving interest rates into negative territory, charging banks for maintaining deposits with the ECB rather than paying the banks positive interest. The hope is that lower (now even negative) interest rates may provide some stimulus to the European economy which might help bring European inflation closer to the ECB’s 2% target. Here I offer a few thoughts on this move.