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Mankiw rule tells the Fed to tighten

Mankiw rule tells the Fed to tighten

The most famous monetary policy rule undoubtedly is the so-called Taylor rule, which basically tells monetary policy makers to set the key monetary policy interest rates as a function of on the one hand the inflation rate relative to the inflation target and on the other hand the output gap.

Certainly not perfect, but Fed policy is not worse than during the Great Moderation (an answer to Scott Sumner)

Certainly not perfect, but Fed policy is not worse than during the Great Moderation (an answer to Scott Sumner)

Scott Sumner has replied to my previous post in which I argued that the Federal Reserve de facto has implemented a 4% NGDP level targeting regime (without directly articulating it).

The Fed's un-announced 4% NGDP target was introduced already in July 2009

The Fed's un-announced 4% NGDP target was introduced already in July 2009

Scott Sumner started his now famous blog TheMoneyIllusion in February 2009 it was among other things "to show that we have fundamentally misdiagnosed the nature of the recession, attributing to the banking crisis what is actually a failure of monetary policy".

End Europe's deflationary mess with a 4% nominal GDP (level) target

End Europe's deflationary mess with a 4% nominal GDP (level) target

From the onset of the Great Recession in 2008 the ECB has been more afraid of doing "too much" rather than too little. The ECB has been obsessing about fiscal policy being too easy in the euro zone and about that too easy monetary policy would create bubbles. As a consequence the ECB was overly eager to hike interest rates in 2011 - way ahead of the Federal Reserve started to talk about monetary tightening.

Is Karnit Flug jeopardizing Stan Fischer's "straight line policy"? Not yet, but...

Is Karnit Flug jeopardizing Stan Fischer's "straight line policy"? Not yet, but...

It is no secret that I think that Stanley Fischer did a good job as governor of the Bank of Israel from 2005 to 2013. He basically saved Israel from the Great Recession by essentially keeping Israeli nominal GDP "on a straight line". During his time in office the Israeli NGDP level diverged no more than 1-1.5% from what we could call the Fischer-trend.

Don't bet on a real appreciation of the renminbi

Don't bet on a real appreciation of the renminbi

It rarely happens, but Scott Sumner and I do sometimes disagree on something.

China might NEVER become the biggest economy in the world

China might NEVER become the biggest economy in the world

It is often assumed that given China's remarkable growth rates over the past three decades - around 10% real GDP per year - China is on the way to soon becoming the largest economy in the world. In fact earlier this year it got a lot of media attention that when the World Bank argued that China already had overtaken the US as the largest in economy in the world. However, the argument was completely bogus as it was based on Purchasing Power Parity (PPP) rather than on actual exchange rates (To be fair we should blame the media rather than the World Bank for this interpretation of the data).

Guest post: What an Enlightened Immigration Policy Would Look Like (Nathan Smith)

Guest post: What an Enlightened Immigration Policy Would Look Like (Nathan Smith)

Guest post: What an Enlightened Immigration Policy Would Look Like

Something very clever Bryan Caplan wrote in 2007 on "Anti-Foreign Bias"

Something very clever Bryan Caplan wrote in 2007 on "Anti-Foreign Bias"

I must admit that I am somewhat depressed by the state of the world today. Deflationary monetary policies in Europe, increased protectionist tendencies and war and geopolitical tensions around the world. It is no secret that I think it is all connected.

At 25 Bob Hetzel had become a Friedmanite. At 80 Milton Friedman had become a Hetzelian

At 25 Bob Hetzel had become a Friedmanite. At 80 Milton Friedman had become a Hetzelian

Watch this after 11:35.

...yes, Friedman went further than Bob. Friedman had also become a market monetarist. He wanted to use the market not only to evaluate monetary policy, but also to implement monetary policy.

HT Sassa

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