ALL BLOG POSTS
These days central bankers seem more concerned about "financial stability" than ever before - and even more concerned about financial stability than nominal stability. These things go in cycles. After 1929 central bankers became terribly concerned about financial stability. Then again in the 1990s after the Mexican crisis in 1994 and the Asian crisis in 1997 and then after the bursting of the "IT bubble" in 2001.
This morning I had the pleasure of doing a presentation on "Milton Friedman, Market Monetarism and the Great Recession" (and a bit on internet-Austrians) for a group of clever young students at the CEPOS Akademi in Copenhagen. CEPOS Akademi is essentially the Danish Free Market think tank CEPOS's summer university.
My blog is mostly about monetary policy matters. However, if I one day would stop writing about monetary policy I think there are two other topics I would focus on. The one is on the need to end the global war on drugs and the second is immigration reform.
Anybody who follow my blog will know that I am not a great fan of the gold standard or any other form of fixed exchange rate policy. However, I am a great fan of policy rules that reduce monetary policy discretion to an absolute minimum.
Last week Scott Sumner gave a lecture in London on the causes of the Great Recession and Market Monetarism. I had the honour of introducing Scott and you might me hear interrupting Scott near the end of the presentation. Scott made a lot more sense than I did.
As I have promised earlier I will in the coming weeks write a number of blog posts on Robert Hetzel's contribution to monetary thinking celebrating that he will turn 70 on July 3. Today I will tell the story about what I regard to be Bob's greatest and most revolutionary idea. An idea which I think marks the birth of Market Monetarism.
Scott Sumner has been speaking at the Adam Smith Institute tonight. I had the honour to introduce Scott. Adam Smith Institute will surely post Scott's presentation soon.
This is from Market Watch:
A key Market Monetarist insight (it is New Keynesian insight as well...) is that budget multiplier is zero if the central bank says it is so. Or rather it the central bank targets inflation, the price level or nominal GDP then the central and will offset any shock - positive or negative - to nominal spending (aggregate demand) from changes in fiscal policy.
I just watched the opening match of the football World Cup between Brazil and Croatia. The model I helped develop with my colleagues in Danske Bank forecasted that Brazil would win by two goals. The model turned out to be right - Brazil won 3-1.