tag:blogger.com,1999:blog-5713178645208582139.post2264659064726075766..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: More Takes on the Fed's Monetary Superpower StatusDavid Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-5713178645208582139.post-5410876694773949562009-11-06T08:51:47.438-06:002009-11-06T08:51:47.438-06:00mb98, you are right that one needs to be careful a...mb98, you are right that one needs to be careful about confusing correlation with causation. In this case, however, there are good reasons to view the Fed as a monetary hegemon. First, there is a good story to explain the casual links. It starts with the fact that the Fed holds the world's main reserve currency and many emerging markets are formally or informally pegged to dollar. Thus, itsDavid Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-55976585486484937772009-11-06T04:43:08.281-06:002009-11-06T04:43:08.281-06:00I'd say that the ecb and boj lag behind the fe...I'd say that the ecb and boj lag behind the fed because inflation lags behind nominal spending as prices are sticky in the short term and the ecb's and boj's response functions put more weight on inflation and less on the output gap.<br /><br />Always remember: correlation != causationmb98http://mb98.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-51242583082302293122009-11-02T09:34:08.956-06:002009-11-02T09:34:08.956-06:00In a previous paper by Calvo, Izquierdo and Talvi,...In a previous paper by Calvo, Izquierdo and Talvi, Sudden Stops and Phoenix Miracles in EM's (2006), they find that high dollarization in conjunction with high current account deficits and a low supply of tradeables greatly increases the probability of sudden stops. He also argues that global capital turmoil creates a temporal bunching of these sudden stops and names the Russian crisis timedoug_the_headhttps://www.blogger.com/profile/07592088994355122753noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-33364675951889631072009-10-31T21:31:38.876-05:002009-10-31T21:31:38.876-05:00Good point Rebel Economist. I still plan to post o...Good point Rebel Economist. I still plan to post on your Treasury composition idea shortly.David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-88655572808987880882009-10-31T14:06:11.896-05:002009-10-31T14:06:11.896-05:00I whole heartedly agree with the 'enabler'...I whole heartedly agree with the 'enabler' premise.<br /><br />An enabler of fraud and massive enronesque chicanery.etznoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-26412816985917990282009-10-31T04:28:33.750-05:002009-10-31T04:28:33.750-05:00And one reason for the strength of the correlation...And one reason for the strength of the correlation between short and long rates in the US would be the way that the Fed uses coupon passes covering the range of treasury maturities to collateralise the base money that they add to hold short term interest rates down (the Fed may lend money - ie buy short-term debt - in the first instance, but as the expansion in the base money supply begins to RebelEconomisthttps://www.blogger.com/profile/13241098878248190971noreply@blogger.com