tag:blogger.com,1999:blog-5713178645208582139.post9082262025336299565..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: What If the Fed Had Tightened Monetary Policy in 2003?David Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-5713178645208582139.post-6314331993577912972010-09-07T14:44:59.359-05:002010-09-07T14:44:59.359-05:00Mr Beckworth --
You do not address the most-promi...Mr Beckworth --<br /><br />You do not address the most-promising possibility. <br /><br />Suppose that, back in 2003, the Fed had acknowledged that housing was now a more-volatile asset class. Then it could have imposed stiffer LTV and capital requirements on housing-backed loans (and derivatives). That would likely have burst the housing bubble without dragging down the overall economy. Or at Passing Bynoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-32928545311799319752010-09-05T13:42:37.805-05:002010-09-05T13:42:37.805-05:00David
No matter if there was or was not a House Pr...David<br />No matter if there was or was not a House Price Bubble in 2002-04. To be consistent with yourself you cannot agree with DB that that was the cause of the "worst downturn in 70 years".<br />It was the failure of MP and Bernanke´s Fed to keep AD on trend during 2008.João Marcushttps://www.blogger.com/profile/13658264244033012660noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-83203779568183127562010-09-04T21:16:07.637-05:002010-09-04T21:16:07.637-05:00Andy:
Starting with Gali (1999), there has emerge...Andy:<br /><br />Starting with <a href="http://www.crei.cat/people/gali/jgaer99.pdf" rel="nofollow">Gali (1999)</a>, there has emerged a literature that shows positive technology or productivity shocks leads to a temporary decline in labor inputs. Eventually, labor input use returns to normal and output grows strongly. A recent study along these lines was in the 2006 AER and titled "<a href=David Beckworthhttps://www.blogger.com/profile/04577612979801459194noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-82012437634007183312010-09-04T12:20:41.428-05:002010-09-04T12:20:41.428-05:00When Dean Baker wrote the paper he linked in mid-2...When Dean Baker wrote the paper he linked in mid-2002, the Case Shiller 20 City composite was at 127 (100 being Jan 2000). Today it is at 147. This is only slightly below inflation and also only slightly below the stock market's performance in that period. He can still argue that housing prices are still a bubble and thus will eventually prove his 2002 prediction correct. On the other dlrnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-42415059646873910352010-09-04T09:24:45.315-05:002010-09-04T09:24:45.315-05:00It wasn't until mid-2004 that the labor market...It wasn't until mid-2004 that the labor market began to recover from the previous recession. Inducing a new recession at that time would have been a blatant violation of the Fed's mandate. A mild recession coming on top another mild recession equals a severe recession. So I don't believe we would have avoided the Great Recession; we would just have moved it up in time.Andy Harlesshttps://www.blogger.com/profile/17582263872850949568noreply@blogger.com