From “Rounding the Corners of the Policy Trilemma: Sources of monetary policy autonomy,” by Michael Klein and Jay hambaugh:
A central result in international macroeconomics is that a government cannot simultaneously opt for open financial markets, fixed exchange rates, and monetary autonomy; rather, it is constrained to choosing two of these three. …
From Debt and Incomplete Financial Markets: A Case for Nominal GDP Targeting, by Kevin Sheedy (LSE), presented at the NBER Summer Institute:
This paper has shown how a monetary policy of nominal GDP targeting facilitates efficient risk
sharing in incomplete financial markets where contracts are denominated in terms of money….
(It is expanding as long as down is redefined as up)
Newly developed indicators suggest eroding international competitiveness.
Here’s the abstract for a paper I recently completed on Off-Balance-Sheet Federal Liabilities:
Much attention has been given to the recent growth of the U.S. federal debt. This paper examines the growth of federal liabilities that are not included in the officially reported numbers. These take the form of implicit or explicit government guarantees and commitments. The five major categories surveyed include support for housing, other loan guarantees, deposit insurance, actions taken by the Federal Reserve, and government trust funds. The total dollar value of notional off-balance-sheet commitments came to $70 trillion as of 2012, or 6 times the size of the reported on-balance-sheet debt. The paper reviews the potential costs and benefits of these off-balance-sheet commitments and their role in precipitating or mitigating the financial crisis of 2008.
What follows is a brief summary of the paper.
In response to what I thought were straightforward renditions of the data indicating reductions in government spending, reader W.C. Varones writes: “Cutting government spending” is a real stretch.” In a (perhaps vain) attempt to convince him that indeed spending is declining, I present data from BEA and CBO (I am hoping that he hasn’t joined the Jack Welch view of government statistics gathering).
The conventional wisdom is that the big jump in interest rates since the beginning of May is the result of a poorly conceived or poorly communicated shift in policy by the U.S. Federal Reserve. The conventional wisdom is wrong.
The third release of 2013Q1 GDP suggests even more tepid growth than originally thought. Government spending at all levels, state/local, and both Federal defense and nondefense, is deducting from growth (in contrast to the previous two recoveries).
According to one widely adopted class of economic models, raising the inflation rate would be one of the most helpful things that could happen to economies in the situation currently faced by Japan and the U.S. Here I describe some new research relevant for testing that theory.
If QE1 through QE3 and other unconventional monetary policy (UMP) measures had little impact upon implementation, why did the hint of a stepback induce such large reactions in international markets?