Stephen Colbert's Solution to Global Economic Woes

Stephen Colbert invokes his inner Keynesian spirit to propose a plan to end the Eurozone crisis and and revive the U.S. economy at the same time.

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Storytelling: Friday Chart Edition

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I have not posted here in awhile, so I thought it would be good to share a few recent charts that tell interesting stories. Central Bank Balance Sheets First up, are two charts that show the relationship between the size of the central bank balance sheets and inflation rates. The first one shows for the 2010-2019 period the average size of central bank balance sheets as a percent of NGDP plotted against the average core inflation rate. Since larger balance sheets are typically seen as adding more stimulus to the economy, one might expect to see a positive relationship between their size and the inflation rate over this long of an horizon. Instead, we see a negative relationship: One objection to the above chart is it may be misleading since it is the rate of change in central bank liabilities, not the level, that should drive the inflation rate. To that end, the next chart shows the change in the size of the central bank balance sheets over the same period. The same relationship ho...
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The Passive Tightening of ECB Policy

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