Finance Basic To Advance Level Knowledge

My latest podcast is with Rudiger Bachmann. Rudi is an associate professor of economics at the University of Notre Dame and a research affiliate at the Center for Economic Policy Research. Rudi has published widely on macroeconomic issues in top journals and is an active member of the German Economic Association. He also blogs and write popular press articles for the German media. Rudi joined me on the show to discuss German macroeconomics as well as some of his own research.  Our conversation begins by noting that German macroeconomics appears to be very different than Anglo-American macroeconomics. Rudi notes that is partly a misperception problem, but there is indeed something different. What is different is how macroeconomics is currently practiced in Germany: it reflects the ordoliberalism view that stresses a rules-based approach to policy. This approach to macroeconomics makes lawyers rather than economists top advisers to policy in Germany and it reflects the lasti...

Bloomberg is reporting that Zimbabwe might be up to some monetary mischief again. The government has started printing currency and, as first noted by JP Koning , the way they are doing it seems dubious. So, as a reminder to the government of Zimbabwe, it might be wise to revisit how bad the monetary mischief got back in 2008. You do not want to repeat that experience. Steve Hanke found the monthly inflation rate hit 79.6 billion percent in November 2008 (89.7 sextillion percent on a year-on-year basis). That is how bad it got. This bout of hyperinflation began in early 2007 and ended in late 2008. At that point the government shut down the printing presses and allowed its citizens to freely use foreign currency. The country quickly dollarized and the country once again had a stable medium of exchange. One way to visualize this hyperinflation is to look at the progression of currency printed by the government. Below are some slides I put together that shows this development....

I have a new working paper with Josh Hendrickson titled Nominal GDP Targeting and the Taylor Rule on an Even Playing Field . Using a standard New Keynesian model, Josh and I show one of the advantages of a nominal GDP target is that it is more robust to the knowledge problem facing central bankers than is the standard approach that implicitly invokes some kind of Taylor rule. Here is an excerpt from the paper on the knowledge problem: One of the key challenges facing monetary policy authorities is the knowledge problem. As first noted by Hayek (1945), this problem arises because the information needed for optimal economic planning is distributed among many individual firms and households and therefore outside the knowledge of a central planning authority. This observation, when specifically applied to central banking, means that the information required to make activist countercyclical policies work is not available. Consequently, monetarists like Friedman (1953, 1968), Brunner (1...

My latest Macro Musings podcast is with Narayana Kocherlakota. Narayana is a professor of economics at the University of Rochester. He has published widely in economics, including in the areas of money and the payment system, business cycles, financial economics, public finance, and dynamic contracts. He also writes regularly for Bloomberg View .  Formerly, Narayana was the president of the Minneapolis Federal Reserve bank , where he served between 2009 and 2015.  He joined me to talk about his time at the Fed and his current views on Fed policy. This was a fascinating conversation throughout and a must-listen episode for all Fed watchers. The first part of our conversation covered what it was like being a regional Fed president. This included, among other things, how he stayed informed, how he managed the Minneapolis Fed, and how he prepared for FOMC meetings. We then moved onto the the FOMC and the dynamics of the meeting itself. The preparation, th...

My latest Macro Musings podcast is with Izabella Kaminska. Izabella is part of  Financial Times Alphaville , where she has been since 2008. She has written extensively on monetary policy, fiscal policy, financial technology, and is key force behind the Financial Times Festival of Finance . As a longtime follower of her work, it was a real treat to have her on the show. We started our conversation by talking about blockchain technology and its implications for the payment system. Izabella is not optimistic about blockchain's future and wonders whether it will fulfill the expectations and hopes many observers have set out for it.  Next, we move on to the topic of universal banking. This is the idea that a central bank would open its balance sheet to anyone, including households and non-financial businesses. Doing so would solve the bank run problem and reduce the probability of a financial crisis. There are already movements in that direction with int...

My latest Macro Musings podcast is with Claudio Borio. Claudio is the director of the Monetary and Economic Department at the Bank for International Settlements (BIS) and has been at the BIS in various roles since 1987. Previously, he was an economist with the OECD. Claudio is the author of numerous publications in the fields of monetary policy, banking, finance and issues related to financial stability. He is a leading voice on macroprudential regulation as well on international monetary stability issues. Claudio joined me to talk about these and other issues. We began our conversation by considering what it is like to work at the BIS, the banks for central banks. We then segue to a discussion on the period leading up to the Great  Recession, a time when the BIS was one of the few institutions warning about the credit and housing boom. How did they get it right when so many central banks got it wrong? One answer is the BIS perspective on macroeconomics goes beyond the...

  My latest Macro Musing podcast is with Andrew Levin. Andy is a professor of economics at Dartmouth College and previously served two decades as an economist at the Federal Reserve Board, including two years as a special adviser to Chairman Ben Bernanke and Vice Chair Janet Yellen. Andy, in short, has a deep understanding of the history and workings of the Board of Governors and the FOMC . During his time as a special adviser he helped spearhead the advent of the FOMC press conference, the Summary of Economic Projections, and the now infamous dot plot graph. He also was involved with the FOMC's official adoption of its 2 percent inflation target. Andy discusses these developments with me and how he would like to see them further refined.  We also discussed what happened in 2008. The economy was contracting and yet for much of the year the Fed was signalling it was worried about inflation and wanted to raise rates. Specifically, beginning around April 2008 the mar...