consider the velocity of M2…
Category Archives: Federal Reserve
Guest Contribution: “Policy Rules and Forward Guidance Following the Covid-19 Recession”
Today, we are pleased to present a guest post written by David Papell and Ruxandra Prodan, Professor and Instructional Associate Professor of Economics at the University of Houston.
“The Fed and the International Financial System”
Today, students in my Master’s level Public Affairs course in macroeconomics had the good fortune to receive a guest lecture from Steven Kamin, resident scholar at AEI, formerly Director of the International Finance Division of the Federal Reserve Board (sponsored by UW’s International Division). In his lecture, he covered the centrality of the dollar in the global financial system, monetary “spillovers” of Fed policy to other economies with special reference to the pandemic response, the macro challenges posed by the most recent fiscal relief package, and implications for emerging market economies. The entire lecture is here.
The Price Level Shortfall
Had we run a 2% price level target since December 2007 (the beginning of the previous recession).
Spreads and Risk over the Past Week (and Months)
I’ve been amazed at how little the last week’s political turmoil has shown up in financial markets. The only thing that seems to have moved anything is the apparent control of the Senate moving to the Democrats.
Inflation Looming? Phillips Curve vs. Quantity Theory
Look at this:
Figure 1: Ratio of M1 to real GDP (blue), of M2 to real GDP (brown), of M3 to real GDP (green), 1959Q1-2020Q3. Quarterly money data average of end of month data. Source: Federal Reserve via FRED, and BEA, 2020Q3 2nd release, and author’s calculations.
A Public Service Announcement: Judy Shelton Does Not Believe in US Government Statistics
The below is a republication of a post from July 19, 2019 entitled “What Does Judy Shelton Believe GDP Growth and Inflation Are in 2019?” in response to Senate Majority Leader Mitch McConnel’s invocation of cloture on the nomination of Judy Shelton to the Federal Reserve Board of Governors.
In a 2015 Cato Institute session, Fed Board Nominee Judy Shelton discusses whether to trust or not official GDP and inflation statistics (she says no — see 1:07:07) (h/t Sam Bell).
Nominal Income Targeting and Measurement Issues
Nominal GDP targeting has been advocated in a recent Joint Economic Committee report “Stable Monetary Policy to Connect More Americans to Work”.
Deviations vs. Shortfalls
The Fed’s new framework, as described by Chairman Powell, mentions “shortfalls” (particularly in employment), instead of deviations of the natural rate. The output analog of this shift is moving from the deviation of output from potential (i.e., output gap) to an output slack measure. If we interpret this as requiring a focus on a Friedman-esque plucking model of maximal output, rather than potential GDP as described in most textbooks, what does this mean for where we are right now? I’d say for the short run, we are still in for a world of pain, economically speaking…
Guest Contribution: “The Significance of Gold’s Record $2,000 Price”
Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared in Project Syndicate.