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.
Understanding the housing bubble
A key reason that I was insufficiently worried in 2005 about bad mortgage loans being made at the time was that the people who funded the loans– most importantly, the packagers and buyers of private-label mortgage-backed securities– had more motivation and resources to evaluate the risks accurately than I did. That they made an incredibly costly mistake is now indisputable. But the question remains, why?
Reflation and Expenditure Switching in a Two Speed World
Declining U.S. carbon dioxide emissions
Emissions of carbon dioxide from fossil fuel consumption in the United States have fallen remarkably since 2008, with recent levels the lowest since 1995. Here I comment on some of the factors behind this.
Wisconsin Employment: Still Lagging despite Upward Revisions
Earlier this week, the BLS released new estimates of state employment, based upon Quarterly Census of Employment and Wages (QCEW) data through September 2012. The figures for Wisconsin have been substantially revised upward. As indicated in previous posts [1] [2] , census data had indicated substantially higher nonfarm payroll employment than that derived from surveys.
Heritage on Seasonal Adjustment
Is February employment growth overstated due to statistical problems?
Iraq Metrics, Ten Years After
We should not forget what costs we incurred in search of weapons of mass destruction.
“Building U.S. Competitiveness”
The Economic Report of the President, 2013, released last Friday, devotes some attention to global rebalancing, a topic that I’ve addressed on a number of occasions. [1] [2]; and this paper. Exchange rate movements are critical, but so too are productivity and wage movements.