tag:blogger.com,1999:blog-5713178645208582139.post2872005081279135144..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: Raghuram Rajam and the Need for More Systematic Monetary PolicyDavid Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-5713178645208582139.post-76747986916591112962011-06-17T04:58:33.566-05:002011-06-17T04:58:33.566-05:00Beckworth: "The point is one has to be carefu...Beckworth: "The point is one has to be careful about claiming low interest rates necessarily mean excessively easy monetary policy."<br /><br />Isn't the relevant question today, then: Why is the neutral (or the natural) rate of interest so low?<br /><br />And then, since "The neutral interest rate, in turn, is closely tied to the performance of the economy," the question The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-48202845402241902332011-06-16T01:53:00.129-05:002011-06-16T01:53:00.129-05:00You are absolutely right in saying that "a lo...You are absolutely right in saying that "a low policy interest rate target by itself does not mean monetary policy is loose, let alone too loose".<br /><br />A low interest rate could mean either of two things a) Both the demand and supply of money are low b) The demand for money is high and is being accommodated by a high supply of money.<br /><br />To decide which it is you need a Philiphttps://www.blogger.com/profile/16538860062019540619noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-54239055137709603852011-06-15T22:08:23.080-05:002011-06-15T22:08:23.080-05:00Another way of saying this is that interest rates ...<i>Another way of saying this is that interest rates would probably be low right now even if there were no Federal Reserve. </i><br /><br />Interest rates would <b>absolutely</b> be low right now even if there were no Federal Reserve.<br /><br />The Fed is an interest rate follower, not a leader. Interest rates are set by the market. Check Fed Funds and 3 mo T-bill rates. Fed Res has data backJazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-65138369233444641032011-06-15T18:49:28.736-05:002011-06-15T18:49:28.736-05:00Excellent commentary.
I still contend that "...Excellent commentary.<br /><br />I still contend that "bubbles" are not caused by the Fed. How does the Fed-bubble idea square with efficient market theory? Should not all asset classes balloon just a bit, rather than one asset class irrationally bubbling?<br /><br />But in general, I like the NGDP targeting policy. <br /><br />Side note: You have some right-wingers calling for 5 Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.com