Author Archives: John Taylor

Lessons Learned on the 30th Anniversary of the Plaza Accord

The Plaza Accord, which took place 30 years ago this month, provides two important (and fascinating) economic lessons essential for anyone interested in reforming, or simply teaching, the international monetary system.  First, sterilized exchange market interventions are largely ineffective. A … Continue reading

Posted in International Economics

Time Inconsistency Is Only One of Many Reasons to Favor Policy Rules

Advocates of purely discretionary monetary policy frequently list Kydland and Prescott’s time inconsistency argument as the only reason for policy rules, and then they try to shoot that down or say it is outweighed by arguments in favor of discretion. … Continue reading

Posted in Monetary Policy

Jobs, Productivity, and Jeb Bush’s Tax Plan

As a matter of accounting, there are two way to increase U.S. economic growth and thereby boost incomes of Americans: increase productivity and increase jobs.  As economists put it, the rate of economic growth equals the rate of productivity growth … Continue reading

Posted in Uncategorized

Can We Restart This Recovery All Over Again?

Andy Atkeson, Lee Ohanian and Bill Simon recently published a nicely-reasoned article about why the US economy can acheive 4% growth.  They argue that with the right policies there is “far more room for the economy to rebound today than after … Continue reading

Posted in Slow Recovery

The Incredible Shifting Model

Robert Tetlow has published a fascinating research paper in the International Journal of Central Banking on policy robustness with the Fed’s FRB/US model. Perhaps the most important part of the paper is his careful documentation of the enormous shifts in the coefficients … Continue reading

Posted in Monetary Policy

Seeking a Way through the Fog of a Currency War

Many have speculated on the nature of, and the reasons for, the exchange rate regime change in China last week. While the central bank has issued press statements and answered questions about it intentions, it is useful to look at … Continue reading

Posted in International Economics

On Why The Economist Should Rule Rules In, Not Out

An old, but forever crucial, question for monetary policy is whether it should be rules-based or purely discretionary. The Economist, in a Free Exchange article this week with the title “Rule It Out,” goes all in for pure discretion, abandoning … Continue reading

Posted in Monetary Policy