Monetary Policy Lessons

 I am no stranger to advising monetary authorities, having spent the past two decades as Permanent Secretary of the Federal Advisory Council. The FAC, established in the original 1913 Federal Reserve Act, is tasked therein to advise the Board of … 
Read More | Comment

Strengthening the Fed’s Toolkit

The GEM Project has generated a set of specific policy recommendations on how best to prevent future Great Recessions or worse. In the most important of these, the Federal Reserve is tasked to substantially strengthen, with respect both to the … 
Read More | Comment

Responding to Jean-Claude Trichet

 

Last week’s blog noted that the world’s preeminent central bankers have complained about the failure of mainstream theory to be helpful in stabilization policymaking. This week’s post looks more closely at Jean-Claude Trichet’s thoughtful critique. Trichet, of course, should command … 
Read More | Comment

Managing Extreme Instability

 

Ben Bernanke, Jean-Claude Trichet and other prominent central bankers have made clear their frustration with modern macro theory. They have complained that consensus modeling was not helpful in their efforts to combat the extreme global instability that began in 2007. … 
Read More | Comment

What About Inflation?

 

The GEM Blog’s three-month series on policy implications of generalized-exchange macroeconomics has yet to consider product-price inflation, focusing instead on the cyclical behavior of employment and output. My emphasis is well outside the macro mainstream that has held for a … 
Read More | Comment

More on Bank Bailouts

Last week’s blog showed that taxpayer losses from bank bailouts during the Great Recession are a myth. Instead, they made a handsome profit on TARP capital injections to the biggest banks, helping to pay for the largely ignored multi-billion-dollar losses … 
Read More | Comment

Demagoguery and Economic Consensus

 

Last week, the GEM Project Blog considered the policymaking importance of consensus among macro theorists. It focused on insights from Robert Lucas in 1980 on the role of the economics mainstream in providing boundaries for political debate on the economy. … 
Read More | Comment

Macroeconomic Consensus

 

This post continues the GEM Blog’s 10-week examination of the state of stabilization policy-making. It is a favorite of mine, taking on an important, albeit unappreciated topic: the effect of economists’ consensus on macro policy outcomes. It begins with some … 
Read More | Comment

Michael Woodford at Jackson Hole

 

The recent post on a better liquidity trap noted Michael Woodford’s claim of elite stabilization power, especially in circumstances of extreme instability, for central-bank forward guidance. That message was delivered in his August 2012 talk at the Fed’s annual Jackson … 
Read More | Comment

Micro-Macro Coherence Is Not Enough

 

Jean-Claude Trichet, the head of the European Central Bank during the global instability crisis that began in 2007, sharply criticized the macroeconomics community three years later: “Macro models failed to predict the crisis and seemed incapable of explaining what was … 
Read More | Comment