Finance Basic To Advance Level Knowledge

As readers of this blog know, I have an interest in the Fed's operating system . This interest has culminated in a new paper  where I look at the consequences of the Fed moving from a corridor system to a floor system in 2008. In particular, the paper looks at what this change has meant for bank portfolios and, as a result, financial intermediation provided by banks. The paper concludes with some policy recommendations. I would also note that George Selgin has just released a new  book  on this topic. My hope is that these projects will help inform the conversation over what operating system the Fed wants as it continues to normalize monetary policy.  Paper Outline So what does my paper have to say? It starts by laying out the standard arguments for a floor system: The central idea behind this move was to remove the opportunity cost to banks of holding excess reserves by offering the banks a deposit rate at the Fed—the IOER rate—that was equal to or abo...

Andrew Metrick of Yale University interviewed former Fed Chair Janet Yellen today. It was an interesting discussion and one where they talked about, among other things, what changes the Fed could bring about in light of the recently announced strategies, tools, and communication review  to be held in 2019.  Janet Yellen said her idea for reform "has much in common with NGDP targeting". Her response can be seen in the video below: Glad to see her endorse a NGDPLT-like monetary regime.