Beyond the Taylor Rule

The following is in blog form the substance of a talk I gave Sept 7 at a Mercatus conference, “Monetary Policy Rules for a Post-Crisis World.“ “Rules versus discretion” is a hardy perennial of monetary policy debate, dating from earliest debates between Bullionists and anti-Bullionists, to the 19th century Currency School versus Banking School, up to the 20th century monetarists

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BIS looks through the financial cycle

“I wouldn’t start from here,” the BIS never says explicitly in its recent Annual Report, but nevertheless it goes on to paint a rather comprehensive and compelling picture of a possible future toward which they think we should be trying to head, and of the present dysfunctional economic policies that are daily making it harder to achieve that possible future.

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Independence versus Accountability?: Evolution of the Fed

Peter Conti-Brown, The Power and Independence of the Federal Reserve (Princeton 2016) A powerful meme has taken possession of popular, and even professional, understanding of the role of the Fed.  To wit, political forces (specifically the US President) are supposedly always pushing for excessive expansion, and the role of the Fed (specifically the Fed Chair) is to resist that pressure. 

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What does repo do?

The Office of Financial Research is out with a new “Reference Guide to U.S. Repo and Securities Lending Markets” which collects together in one place most of what is known, and draws some attention to how much is not known, about this key bit of monetary infrastructure. Kudos to the authors for treating repo and securities lending in the same

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The Fuss about Market Liquidity

The recently released PwC “Global Financial Markets Liquidity Study”, sounds a warning.  Financial regulation, while perhaps well-intentioned, has gone too far.  Banks may be safer but markets are more fragile. At the moment, this fragility is masked by the massive liquidity operations of world central banks.  But it will soon be revealed as, led by the Fed, central banks attempt to exit.

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Flash Crash explained by HFT

The official report on events of October 15, 2014, is now public and it makes fascinating reading.  Most news accounts of the report have taken its bland no-smoking-gun conclusion at face value, but if you actually read the report a rather clear picture emerges, along with some rather obvious unanswered questions.  Bloomberg has the best account, but there is more

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