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
Leave a comment
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
Leave a comment
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
Leave a comment
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
Leave a comment
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
Leave a comment
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
Leave a comment
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
Leave a comment
Other Economic Lessons the US Can Learn from Greece
Last week the Senate Foreign Relations Subcommittee on Europe and Regional Security Cooperation held a hearing for which I was asked to address the lessons that the United States can learn from the Greek financial crisis. One obvious lesson is … Continue reading
Make Failure Feasible and End “Too Big To Fail”
Today the Senate held a hearing on a bankruptcy reform proposal which would address the problem of too-big-to-fail head on. The reform applies to large financial firms and makes failure feasible under clear rules without systemic spillovers thereby greatly reducing … Continue reading
Posted in Financial Crisis, Regulatory Policy
Leave a comment
Does the Fed Have a Monetary Policy Strategy?
The subject of a monetary policy strategy for the Fed came up in Congressional hearings I testified at today and last week. Today the hearing focussed on the bill to require the Fed to describe its strategy or rule for the systematic … Continue reading
Posted in Monetary Policy
Leave a comment
Economics One 