Author Archives: John Taylor
A New Normal for Monetary Policy?
A year and a half ago when the Fed’s extraordinary quantitative easing (QE) was shifting from emergency liquidity programs to large scale asset purchases, we convened a conference at Stanford’s Hoover Institution to discuss the shift. Jim Hamilton, of UC … Continue reading
Posted in Monetary Policy
Comments Off on A New Normal for Monetary Policy?
Cash for Clunkers in a Macro Context
More empirical studies are demonstrating that temporary fiscal stimulus actions are a poor way to get the economy moving again on a sustainable basis. More permanent and predictable policies are much better. I demonstrated this problem in the case of … Continue reading
Posted in Fiscal Policy and Reforms
Comments Off on Cash for Clunkers in a Macro Context
Beware of Announcement Effects When Assessing Policy Interventions
The effects of exchange market interventions are frequently estimated by looking at what happened on the day of the announcement of the intervention or of the intervention itself. But my observation—based in part on experience running the international division of … Continue reading
Posted in Monetary Policy
Comments Off on Beware of Announcement Effects When Assessing Policy Interventions
Meltzer’s History Lesson
I recently had the pleasure of reading, and then writing a review of, Allan Meltzer’s monumental A History of the Federal Reserve, Volume 2 which is published in Book 1 and Book 2. The lesson from this thorough 2,112-page history … Continue reading
Posted in Monetary Policy
Comments Off on Meltzer’s History Lesson
Trading Places: HIPCs and HIICs
I thought of the movie Trading Places when I saw the term HIIC in the headline of today’s Wall Street Journal article by Kelly Evans. The new term refers to the “Heavily Indebted Industrialized Countries” and of course to the … Continue reading
Posted in International Economics
Comments Off on Trading Places: HIPCs and HIICs
New Evidence Shows that Low Interest Rate Led To Yield Search
New empirical research establishes a strong relationship between very low interest rates set by the Fed, as in the period 2002-2005, and a risk-taking search for yield. This policy-induced lessening of risk aversion has been emphasized by Raghu Rajan and … Continue reading
Posted in Monetary Policy
Comments Off on New Evidence Shows that Low Interest Rate Led To Yield Search
Policy Rule Gaps as Forecasts of Currency and Interest Rate Movements
Currency strategists at the Scotiabank are using “policy rule differentials” rather than simple “interest rate differentials” in a creative way to predict interest rate and currency movements. As reported in this Bloomberg piece Taylor Rule Gap with U.S. at 15-Year … Continue reading
Posted in International Economics
Comments Off on Policy Rule Gaps as Forecasts of Currency and Interest Rate Movements
The Transparent Effect of Foreign Interest Rates on Central Bank Decisions
Last June the central bank of Norway hosted a fascinating conference in Oslo on the use of monetary policy rules in small open economies. The Norges Bank is a remarkably transparent central bank. As with the Swedish Riksbank, it announces … Continue reading
Posted in Monetary Policy
Comments Off on The Transparent Effect of Foreign Interest Rates on Central Bank Decisions
Senate Budget Committee Reopens Debate on Policy and the Crisis
In a hearing today, the Senate Budget Committee reopened the debate about whether the stimulus packages and other federal interventions have been effective. Here is the written testimony of Alan Blinder, Mark Zandi, and me, the three economists who were … Continue reading
Posted in Financial Crisis
Comments Off on Senate Budget Committee Reopens Debate on Policy and the Crisis
Timely Views on Deflation from Governor Shirakawa
For years economists and policymakers in the United State have been expressing fears that America would enter a Japanese-style deflation and thereby experience a lost decade like Japan in the 1990s. One of the earliest examples was the October 1999 … Continue reading
Posted in Monetary Policy
Comments Off on Timely Views on Deflation from Governor Shirakawa
Economics One 