tag:blogger.com,1999:blog-5713178645208582139.post4028884947644608902..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: How Low Must It Go?David Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-5713178645208582139.post-15302737042666014062010-08-29T02:02:37.067-05:002010-08-29T02:02:37.067-05:00I've been trying to get a handle on this as an...I've been trying to get a handle on this as an informed lay-person. Way back when I took Intro Econ, I was told that the reason fiscal policy by itself is not sufficient to cure a depression is because once the Fed has reduced it's interest rate to 0% it has reached its practical limit because "you can't push on a string." From what I read, banks currently have about $1.2 Procopiushttps://www.blogger.com/profile/17554355440319405363noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-38008639316416911752010-08-24T11:28:56.700-05:002010-08-24T11:28:56.700-05:00David, as you have pointed out, the way for the Fe...David, as you have pointed out, the way for the Fed to fix things is to publicly commit to an NGDP or price level path. The question you have to ask yourself is why they don't do it. My simple answer is that the first law of bureaucracy is to avoid accountability. But it may go deeper than that. Arnold Kling has pointed out that while a simple public Fed reaction function might be good for Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-24647620953677813862010-08-24T10:47:14.773-05:002010-08-24T10:47:14.773-05:00Thank you.Thank you.Derrill Watsonhttps://www.blogger.com/profile/08996812965100062495noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-21882276371997133032010-08-23T21:02:14.358-05:002010-08-23T21:02:14.358-05:00DB:
Aren't you constraining the debate there t...DB:<br />Aren't you constraining the debate there to a framework consistent with Wicksell-Taylor-rule type reasoning? I think the White-Rajan camp are saying that is too narrow, that you have to take into consideration the "Greenspan put" or risk channel considerations that Andrew Haldane at the BofE has written about (eg his essay on Doom Loop). Keeping rates low for an extended ecbnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-14896329739038010122010-08-23T16:39:22.959-05:002010-08-23T16:39:22.959-05:00ECB:
To claim interest rates are too low now, one...ECB:<br /><br />To claim interest rates are too low now, one is implicitly claiming they are low relative to the neutral or natural rate. Do you think the neutral rate has increased enough to justify their claims?David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-59414714231408436162010-08-23T13:14:33.365-05:002010-08-23T13:14:33.365-05:00Looks like William White disagrees with you (as do...Looks like William White disagrees with you (as does U.Chicago boy Rajan): (Bloomberg, today)<br />Low rates are not a free lunch, but people are acting as though they are,” said White, 67, who retired in 2008 from the Basel, Switzerland-based BIS and now chairs the Economic Development and Review Committee at the Paris-based Organization for Economic Cooperation and Development. “There will be ecbnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-66035353076873639602010-08-21T16:42:30.062-05:002010-08-21T16:42:30.062-05:00" If bankers truly believed in this recovery,..." If bankers truly believed in this recovery, they'd be far more generous with loans. They don't, and today's action confirmed their suspicions. Credit is constricting, and with it our consumer based economy. Deflation's Death Grip is here to stay, folks.. especially if November's elections bring divided government, which I fully expect and which will bring gridlock to Mr. Kowalskihttps://www.blogger.com/profile/07899577790533734474noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-16960574513509551852010-08-20T21:43:15.627-05:002010-08-20T21:43:15.627-05:00David,
I'm teaching a self designed course ca...David,<br /><br />I'm teaching a self designed course called "Issues in Monetary Policy" this fall at Rowan University this fall. The point of my course in part will be to lead students to the conclusion that NGDP targeting is the future of monetary policy. Posts like this help.<br /><br />MarkMark A. Sadowskihttps://www.blogger.com/profile/08259309059705236763noreply@blogger.com