tag:blogger.com,1999:blog-5713178645208582139.post1055422654513521625..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: Eurozone BlegDavid Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-5713178645208582139.post-76805832148034257572011-03-13T11:05:09.631-05:002011-03-13T11:05:09.631-05:00JDTapp: Yep. But IIRC, the second pillar was M3? N...JDTapp: Yep. But IIRC, the second pillar was M3? Not the base.<br /><br />David: It might be interesting to contrast with a same graph for the US.Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-91358282537560702532011-03-13T10:19:48.339-05:002011-03-13T10:19:48.339-05:00David,
I thought a central bank could target the ...David,<br /><br />I thought a central bank could target the base or the overnight rate, but not both. <br /><br />A graph of the ECB policy rate from '02-'07 shows that, like the Fed, it left rates unchanged for an "extended period", and later raised them a fixed amount at each meeting. This doesn't look like a series of rate movements intended to produce a consistent rateDavid Pearsonnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-21159026210326644742011-03-13T06:39:54.010-05:002011-03-13T06:39:54.010-05:00My International Macroeconomics textbook says &quo...My International Macroeconomics textbook says "ECB has twin pillars":<br /> 1. Expected price inflation. <br /> 2. Reference value for money supply growth (4.5% annual growth rate).<br /><br />Not sure what money supply measurement is used here, I'm just looking at my notes. <br /><br />Might that help explain your graph?Justin D. Tapphttps://www.blogger.com/profile/12618278252714742391noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-52732705895648607722011-03-12T20:51:34.197-06:002011-03-12T20:51:34.197-06:00Nick:
Brilliant idea. I will do it, as I actually...Nick:<br /><br />Brilliant idea. I will do it, as I actually have several other figures on the Eurozone I have been meaning to post and discuss. The "targeting the monetary base" bit will be a nice lead in to the broader discussion. Interestingly, what these figures collectively show is that it is the monetary base driving most of the growth in nominal spending. The money multiplier isDavid Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-16845979091699092292011-03-12T18:15:54.668-06:002011-03-12T18:15:54.668-06:00Thanks for the graph David.
The Eurozone fundamen...Thanks for the graph David.<br /><br />The Eurozone fundamentals are pretty weak for the Euro. If risk picks up get ready for a flood back into USD<br /><br /><a href="http://theintrinsicvalue.com" rel="nofollow">Intrinsic Value</a>Intrinsichttps://www.blogger.com/profile/07652406279029359329noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-60322306323354318682011-03-12T09:20:14.341-06:002011-03-12T09:20:14.341-06:00Dunno.
1. Milton Friedman wanted to target M2, n...Dunno. <br /><br />1. Milton Friedman wanted to target M2, not M0.<br /><br />2. That thing is just too damned straight. There are no straight lines in economics, unless somebody decided to make them straight.Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-87495556516243590702011-03-12T08:38:14.633-06:002011-03-12T08:38:14.633-06:00Congratulations to David Beckworth for unearthing ...Congratulations to David Beckworth for unearthing the chart above. My explanation (largely surmise) is thus.<br /><br />The monetary base really takes off around 2002. This coincides with the take-off of property prices in at least one of Europe’s more irresponsible and larger economies: Spain. See here (and scroll down to Spain): <br />http://www.globalpropertyguide.com/real-estate-house-prices/Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-23327717044393995142011-03-12T07:52:39.875-06:002011-03-12T07:52:39.875-06:00A suggestion:
Write a new post.
Title: "Is ...A suggestion:<br /><br />Write a new post.<br /><br />Title: "Is the ECB really targeting the monetary base?"<br /><br />Content: "Look at this graph:<br /><br />Draw graph.<br /><br />WTF?"<br /><br />Then sit back and watch the hits pour in!<br /><br />Hey, it worked for me on "US productivity exceptionalism"!Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-3697836901169535092011-03-12T06:45:54.091-06:002011-03-12T06:45:54.091-06:00That picture is really strange.
That is exactly w...That picture is really strange.<br /><br />That is exactly what I would expect if they were targeting the monetary base, rather than inflation. It stays almost perfectly on trend, until the financial crisis. And then it blips up a couple of times, but keeps returning to the same trend line.<br /><br />My prior would have been:<br />1. It would wander around a lot more,<br />2. It would balloon Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.com