Project Syndicate - 2 Jan 2018
Over the past few years, the persistence of low inflation in high-income countries has confounded central bankers and economic policymakers, who believe that declining unemployment should drive up aggregate demand, and thus prices. The truth is that many of the assumptions underlying the conventional wisdom about inflation no longer apply (reads in 5-7 min).
Published in Weekly selection 5 January 2018
Project Syndicate - 24 Jul 2017
PIMCO’s global strategist ponders why investors in risky asset markets are so complacent while bond investors are waving red flags. In his opinion, when cross-asset market volatility is low, de-risking is prudent. He sees two reasons to worry as an investor: (1) to the extent that the gap between trend growth and natural rates drives up asset valuations, marginal changes in that gap should lead to changes in those valuations; (2) higher valuations do not necessarily mean higher returns or better volatility-adjusted returns. A bit technical at times but worth reading (in 6-8 min).
Published in Weekly selection 28 July 2017
Project Syndicate - 31 Jan 2017
2017 may be the first year in a decade with no advanced economy experiencing deflation. Possibly, the long-awaited effects of the historic monetary expansion are finally yielding fruit, but most likely, currency depreciation in the UK, Japan, and the Eurozone has been a catalyst. Central banks will tolerate, if not encourage, a bit of inflation: it will help to erode the mountains of debt that advanced economies have built up in the past 15 years or so (reads in 3-5 min).
Published in Weekly selection 3 February 2017