The text is now available of the discussion of of “Inflation targeting does not anchor inflation expectations: Evidence from firms in New Zeland” by Saten Kumar, Hassan Afrouzi, Olivier Coibion, and Yuriy Gorodnichenko at the Fall 2015 Brookings Panel on Economic Activity, Washington, DC, September 10-11, 2015.
Yearly Archives: 2015
Panel presentation: Optimal Design for Monetary Policy in Post-Crisis Period
Panel discussion, “Optimal Design for Monetary Policy in the Post Crisis Period” (slides), at the conference “Monetary Policy Implementation and Transmission in the Post-Crisis Period,” Federal Reserve Board, Washington, DC, November 12-13, 2015.
Excel sheet used in slide 5 for the simple example of a cost-benefit analys of leaning against the wind.
Discussion of Turner, “The Case for Monetary Finance – An Essentially Political Issue”
Discussion (slides) of Adair Turner, “The Case for Monetary Finance – An Essentially Political Issue,” at the 16th IMF Annual Research Conference, “Unconventional Monetary and Exchange Rate Polices,” November 5-6, 2015, IMF, Washington, DC.
Video (my discussion starts 25 minutes into the session).
A more rigorous and analytical treatment of the issue is available in this paper by Willem Buiter.
Monetary policy and macroprudential policy: Different and separate?
“Monetary policy and macroprudential policy: Different and separate?”, Canadian Journal of Economics, (2018) 51(3) 802-827. Paper. Published article.
Abstract
The paper discusses how monetary and macroprudential policies can be distinguished, how appropriate goals for the two policies can be determined, whether the policies are best conducted separately or coordinately and by the same or different authorities and how they can be coordinated when desired. The institutional frameworks in Canada, Sweden and the UK are briefly compared. The Swedish example of monetary policy strongly “leaning against the wind” and the subsequent policy turnaround is summarized, as well as what estimates have been found of the costs and benefits of leaning against the wind. Continue reading
The deceptive debt ratio – scrutiny of Riksbank assertions
Discussion 2 of Ajello, Laubach, López-Salido, and Nakata, “Financial stability and optimal interest-rate policy”
A second discussion (slides) of the paper “Financial Stability and Optimal Interest-Rate Policy” by Andrea Ajello, Thomas Laubach, David López-Salido, and Taisuke Nakata, Federal Reserve Board, at the conference “Monetary Policy Lessons from the Financial Crisis,” Swiss National Bank Research Conference, September 24-26, 2015.
A previous (and different) discussion of this paper is here.
IMF: Monetary policy should focus on price stability
Monetary policy should stick to its core mandate of price stability, and should deviate from its traditional role only if the benefits to the economy outweigh the costs, according to a new study from the International Monetary Fund, “Monetary Policy and Financial Stability.”
The question is whether monetary policy should be altered to contain financial stability risks. Should it lend a hand by temporarily raising interest rates more than warranted by price and output stability objectives?
Based on our current knowledge, and in present circumstances, the answer is generally no.
Discussion of “Inflation targeting does not anchor inflation expectations”
Discussion (text) of “Inflation targeting does not anchor inflation expectations: Evidence from firms in New Zeland” by Saten Kumar, Hassan Afrouzi, Olivier Coibion, and Yuriy Gorodnichenko at the Fall 2015 Brookings Panel on Economic Activity, Washington, DC, September 10-11, 2015. Published in Brookings Papers on Economic Activity, Fall 2015, 212-219.
Cost-benefit analysis of leaning against the wind
Presentation at the AQR Institute of Asset Management event Perspectives: Unprecedented Monetary Policy Intervention, London Business School, London, June 25, 2015.
Previous version presented at the Bank of England-Hong Kong Monetary Authority-International Monetary Fund conference on Monetary, Financial and Prudential Policy Interactions in the Post-Crisis World held at Bank of England, London, June 16-17, 2015.
How best to manage a housing boom: Interview by IMF Survey
An interview of me by IMF Survey.
- Monetary policy is not suitable for managing housing booms and rising household debt
- Not all housing booms pose a problem
- Identifying problem cases requires deep and complex analysis
A simple cost-benefit analysis of using monetary policy for financial-stability purposes
“A simple cost-benefit analysis of using monetary policy for financial-stability purposes,” in Blanchard, Olivier J., Raghuram Rajan, Kenneth S. Rogoff, and Lawrence H. Summers, eds., Progress and Confusion: The State of Macroeconomic Policy, MIT Press, forthcoming.
Contribution to the conference Rethinking Macro Policy III: Progress or Confusion?, Washington, DC, April 15-16, 2015.
Fed’s Williams: Monetary policy should not be used to address financial stability risks, even as last resort
A speech, with several references to the Swedish experience, of John Williams, President of the Federal Reserve Bank of San Francisco, on May 27, 2015. Here is the part that refers to Sweden: Continue reading
Mortgage contract design, monetary policy, and financial stability
Presentation in a panel at the conference Mortgage Contract Design: Implications for Households, Monetary Policy and Financial Stability, Federal Reserve Bank of New York, May 20-21, 2015. Program with papers and slides.
FT Alphaville post on Riksbank with many errors
Matthew Klein has published an FT Alphaville post with many errors, “Sweden’s inflation record is less interesting than you think.” Its main point is that “the harshest criticisms [of the Riksbank] seem to be unjustified” and that “A reevaluation of the Riksbank’s recent record looks to be in order.” But the post’s reasoning and conclusion do not stand up to scrutiny. Continue reading
Update: The Riksbank’s target achievement does not look better with CPIF and CPIX inflation, or with HICP inflation
Update of previous post, now with data through March 2015 and with HICP inflation. CPIF inflation has an upward bias, since it excludes the effect on inflation of mortgage rates trending down but includes the effect of housing prices trending up. Nevertheless, counter to what is sometimes argued, the Riksbank’s target achievement does not look better with either CPIF and CPIX inflation, or with HICP inflation.