The Washington Post - paywall - 15 Oct 2017
In a recent paper presented at an economic think-tank, the former chairman of the Fed explains why, should another sharp recession occur, the Fed won’t be able to contain it. As we already live in a “low-inflation, low-interest-rate environment”, unconventional monetary policies and forward guidance will no longer work. Bernanke offers a solution, but it’s complex (reads in 5-7 min).
Published in Weekly selection 20 October 2017
Project Syndicate - 30 Aug 2017
The two academics / policy-makers argue that digital currencies (over which policymakers and regulators have little control) could further destabilize an already-tenuous leverage- and liquidity-based system. In their opinion, the danger of crypto-currencies extends beyond facilitation of illegal activities. Unlike conventional currencies, they also have no corresponding liability, meaning that there is no institution like a central bank with a vested interest in sustaining their value (reads in 5-7 min).
Published in Weekly selection 2 September 2017
Project Syndicate - 10 Jul 2017
At a time when central banks are winding down unconventional monetary policies, Roubini argues that they’ll have to reintroduce them if another recession or financial crisis occurs. The reason? Even if they can get the equilibrium rate back to 3% before the next recession hits, they still won’t have enough room to maneuver effectively. Interest-rate cuts will run into the zero lower bound before they can have a meaningful impact on the economy, leaving central banks with just four options (reads in 5-7 min).
Published in Weekly selection 14 July 2017