Is QE2 a Savior, Inflator or a Dud?
Bloomberg.com (Booth "Business Class" Series). Local copy Why quantiative easing has no direct effect. It slightly shortens the maturity structure of Government debt, which makes us more vulnerable to a run. Most of all, it is a big mistake for the Fed to claim to be in charge of everything when it's really powerless.
Bloomberg.com (Booth "Business Class" Series). Local copy Why quantiative easing has no direct effect. It slightly shortens the maturity structure of Government debt, which makes us more vulnerable to a run. Most of all, it is a big mistake for the Fed to claim to be in charge of everything when it's really powerless.
Why the 2025 budget matters today
Wall Street Journal. Long term deficits and short term debt leave us vulnerable to a run on the dollar and stagflation. A simple summary of "Understanding policy in the great recession." Local pdf copy for those without WSJ access.
Wall Street Journal. Long term deficits and short term debt leave us vulnerable to a run on the dollar and stagflation. A simple summary of "Understanding policy in the great recession." Local pdf copy for those without WSJ access.
Panel on the financial crisis
Video with Simon Johnson, Raghu Rajan, Rene Stulz, at the AFA meetings
Video with Simon Johnson, Raghu Rajan, Rene Stulz, at the AFA meetings
Understanding fiscal and monetary policy in the great recession: Some unpleasant fiscal arithmetic
European Economic Review 55 2-30 ScienceDirect Link
Why there was a big recession; will we face inflation or deflation, can the Fed do anything about it in the face of looming deficits? This is a longer article, expanding on themes below and making some of the arguments precise, with a few equations. Yes, fiscal stimulus is possible..(a teaser)
European Economic Review 55 2-30 ScienceDirect Link
Why there was a big recession; will we face inflation or deflation, can the Fed do anything about it in the face of looming deficits? This is a longer article, expanding on themes below and making some of the arguments precise, with a few equations. Yes, fiscal stimulus is possible..(a teaser)
Les cerveaux de Chicago à l'épreuve de la crise
Les Echos (French) Story. Long interview by Pascale-Marie DesChamps on the finanical crisis, efficient markets, etc.
Les Echos (French) Story. Long interview by Pascale-Marie DesChamps on the finanical crisis, efficient markets, etc.
Contagion and other Euro Myths
Wall Street Journal. Local pdf The latest on the unfolding sovereign debt crisis. Contagion is nonsense, and short term debt is a big part of the problem.
Wall Street Journal. Local pdf The latest on the unfolding sovereign debt crisis. Contagion is nonsense, and short term debt is a big part of the problem.
Quantitative Easing
Local copy of Sense and Nonsense in the Quantitative Easing Debate. which appeard VoxEu ec 7 2010. The great savior and stimulator, or the beginning of devaluation and inflation? Actually, neither -- both sides keep forgetting that money and short term debt are the same thing when interest rates hit zero. All this does is to shorten the maturity structure of Government debt. However, that's not such a good thing -- it makes us more vulnerable to Greek style crises. Also a short reminder about the Friedman rule. 2013 note to some crazy bloggers who claim I've been an inflation maven, the section "no inflationary effect" documents some facts.
Local copy of Sense and Nonsense in the Quantitative Easing Debate. which appeard VoxEu ec 7 2010. The great savior and stimulator, or the beginning of devaluation and inflation? Actually, neither -- both sides keep forgetting that money and short term debt are the same thing when interest rates hit zero. All this does is to shorten the maturity structure of Government debt. However, that's not such a good thing -- it makes us more vulnerable to Greek style crises. Also a short reminder about the Friedman rule. 2013 note to some crazy bloggers who claim I've been an inflation maven, the section "no inflationary effect" documents some facts.
Stimulus: Neither Needed nor Free
Los Angeles Times. 300 words on "does the economy need more stimulus," with 8 other sages. No.
Los Angeles Times. 300 words on "does the economy need more stimulus," with 8 other sages. No.
Stimulus, RIP
A last piece on fiscal stimulus, as we all decide whether it was the great savior of the recession, or an ineffective idea ready to go on the ash-heap of bad ideas. Guess what I think. I explain the Barro theorem, how it constrains the debate even if it isn't literally true (how it's false matters a lot), and I respond to Krugman and Delong's latest outrages, in particular the claim that stimulus opponents have no model.
A last piece on fiscal stimulus, as we all decide whether it was the great savior of the recession, or an ineffective idea ready to go on the ash-heap of bad ideas. Guess what I think. I explain the Barro theorem, how it constrains the debate even if it isn't literally true (how it's false matters a lot), and I respond to Krugman and Delong's latest outrages, in particular the claim that stimulus opponents have no model.
Inflation or deflation?
I’m giving several talks with this title, based on more serious analysis in Understanding fiscal and monetary policy in the great recession. Slides that go with the paper. Here is a video of a short presentation given to the University Alumni Club in New York, October 2010. Fiscal theory in 20 minutes, with a fun introduction by Cliff Asness. Slides for the New York talk. The talk I gave at the NBER EFG Oct 23 2009.
I’m giving several talks with this title, based on more serious analysis in Understanding fiscal and monetary policy in the great recession. Slides that go with the paper. Here is a video of a short presentation given to the University Alumni Club in New York, October 2010. Fiscal theory in 20 minutes, with a fun introduction by Cliff Asness. Slides for the New York talk. The talk I gave at the NBER EFG Oct 23 2009.
Geithner's Global Central Planning
Wall Street Journal. Local copy Literary analysis of Treasury Secretary Tim Geithner's Letter to the G-20. "Global imbalances," "structural policy," "credible medium-term fiscal targets," "strengthen export performance," "support global demand." What does all this mean anyway? Are these all just BS bingo entries to keep staff from falling asleep at global conferences? Sorry, Mr. Geithner, I know it's your job to mouth these platitudes, but there are real issues to be dealth with and someone might take this stuff seriously.
Wall Street Journal. Local copy Literary analysis of Treasury Secretary Tim Geithner's Letter to the G-20. "Global imbalances," "structural policy," "credible medium-term fiscal targets," "strengthen export performance," "support global demand." What does all this mean anyway? Are these all just BS bingo entries to keep staff from falling asleep at global conferences? Sorry, Mr. Geithner, I know it's your job to mouth these platitudes, but there are real issues to be dealth with and someone might take this stuff seriously.
A Big Stick for the Fed
This is a draft oped that didn't make it to the Wall Street Journal. Probably with good reason. I'm thinking about the deflation quandary, and that the Fed may be powerless to stop deflation. How can you implement a commodity standard as a backstop in the US? I think about targeting the TIPS spread. Commodity standards are essentially fiscal commitments; that's the big stick the Fed is missing. Targeting the TIPS spread or equivalent CPI-linked securities could provide the backstop to prevent deflation, and allow the Fed to make the fiscal commitments necessary to stop inflation or deflation.
This is a draft oped that didn't make it to the Wall Street Journal. Probably with good reason. I'm thinking about the deflation quandary, and that the Fed may be powerless to stop deflation. How can you implement a commodity standard as a backstop in the US? I think about targeting the TIPS spread. Commodity standards are essentially fiscal commitments; that's the big stick the Fed is missing. Targeting the TIPS spread or equivalent CPI-linked securities could provide the backstop to prevent deflation, and allow the Fed to make the fiscal commitments necessary to stop inflation or deflation.
A Skeptical Appraisal of Frictions in the Financial Crisis
Notes and Pictures. This is a 2 hour lecture for Ph.D. students at the Deutsche Bank Symposium hosted by the Booth School September 2010. It offers a skeptical view of the emerging consensus that the financial crisis is all about "bubbles" "liquidity spirals" "fire sales" "capital constraints" at commercial banks and so on. I do think there was a run on repo and short term financing. Good old fashioned macro asset pricing works a lot better than you might have thought. Some themes are picked up in Discount Rates.
Notes and Pictures. This is a 2 hour lecture for Ph.D. students at the Deutsche Bank Symposium hosted by the Booth School September 2010. It offers a skeptical view of the emerging consensus that the financial crisis is all about "bubbles" "liquidity spirals" "fire sales" "capital constraints" at commercial banks and so on. I do think there was a run on repo and short term financing. Good old fashioned macro asset pricing works a lot better than you might have thought. Some themes are picked up in Discount Rates.
Greek Myths
Wall Street Journal. Local pdf file. Let Greece default to save the Euro. A good currency is a monetary union without fiscal union.
Wall Street Journal. Local pdf file. Let Greece default to save the Euro. A good currency is a monetary union without fiscal union.
Save the Euro, let Greece go.
Event and video from the IGM Myron Scholes forum on "The Euro In Crisis." More video from the April 28 Management Conference.
Event and video from the IGM Myron Scholes forum on "The Euro In Crisis." More video from the April 28 Management Conference.
Mc Neill Lehrer News Hour
One year anniversary of the stimulus. Guess what, I didn't think much of stimulus.
One year anniversary of the stimulus. Guess what, I didn't think much of stimulus.
The Globe and Mail interview
Article by Dan Richards, and the Full interview, on economics, policy and markets. Video interview on lessons from the great depression
Article by Dan Richards, and the Full interview, on economics, policy and markets. Video interview on lessons from the great depression
New Yorker interview
John Cassidy’s piece in the New Yorker isn’t very flattering about Chicago to say the least. He was decent enough to post the full interviews, which sound a lot more sensible, at least to me. His interview with Gene Fama is here.
John Cassidy’s piece in the New Yorker isn’t very flattering about Chicago to say the least. He was decent enough to post the full interviews, which sound a lot more sensible, at least to me. His interview with Gene Fama is here.
Introduction for Darrell Duffie
Introduction for Darrell’s AFA presidential speech.
Introduction for Darrell’s AFA presidential speech.
Lessons from the financial crisis
(was “Financial crisis and policy”) Regulation 32(4), 34-37. The financial crisis is mainly about too big to fail expectations. The only way out is to limit the government’s authority to bail out. Article based on a talk given at Cato, Nov 6, NY.
(was “Financial crisis and policy”) Regulation 32(4), 34-37. The financial crisis is mainly about too big to fail expectations. The only way out is to limit the government’s authority to bail out. Article based on a talk given at Cato, Nov 6, NY.