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 … 
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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 … 
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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. … 
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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 … 
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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 … 
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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 … 
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A Better Liquidity Trap

Its puzzling why the Keynesian liquidity trap is so broadly used in the design of stabilization policy. The evidence shows that interest rates exert, relative to expectations of nonstationary profits, minor influence on business investment decisions. Moreover, even the minor … 
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David Romer in What Have We Learned?

The proliferation of books in which leading economists offer advice on how best to respond to the Great Recession provides snapshots of the current state of macroeconomics. Of particular interest to the GEM Project is the star-studded 2014 IMF collection, … 
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What To Do About the Fed Toolkit?

Historians of the 1913 Federal Reserve Act should find out who was most responsible for Section 13(3), giving the central bank authority to lend broadly in “unusual and exigent circumstances”. The person is a hero. 13(3) provided the legal basis … 
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