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February 2, 2015

Monetary Policy
Employment Data Suggest Fed Could Be "Patient" Until 2016—or Later

In its last two statements, the FOMC has said that it “expects inflation to rise gradually toward 2 percent over the medium term”—2 percent being its target rate. What would it take to move it the…

Employment Data Suggest Fed Could Be "Patient" Until 2016—or Later

January 13, 2015

Europe and Eurasia
Correcting Paul Krugman’s Austerity Chart for Monetary Effects Yields Very Different Results

In two recent blog posts (1/6 and 1/7), Paul Krugman highlighted a chart he made that, he says, illustrates clearly the failure of “austerity” around the world.  We reproduce it above on the left…

Correcting Paul Krugman’s Austerity Chart for Monetary Effects Yields Very Different Results

January 8, 2015

Capital Flows
Which Countries Should Fear a Rate Ruckus?

For many Emerging Markets, May 22, 2013 is a day that will live in infamy.  It marks the start of the great Taper Tantrum, when Ben Bernanke’s carefully hedged remarks on prospects for slowing Fed…

Which Countries Should Fear a Rate Ruckus?

December 16, 2014

Monetary Policy
What Did the Greenspan Fed Do with Its “Considerable Time” Pledge in ’04?

The big question for the December 16-17 FOMC meeting is whether to drop the pledge to keep rates at near-zero for a “considerable time.” Prior to the last meeting in October, two-thirds of primary…

What Did the Greenspan Fed Do with Its “Considerable Time” Pledge in ’04?

December 16, 2014

Europe and Eurasia
The Politics of IMF Crisis-Country Growth Projections

IMF GDP growth “projections” accompanying emergency lending programs are nothing of the sort; they are targets the level of which is necessarily set high enough to enable the interventions. Take …

The Politics of IMF Crisis-Country Growth Projections

November 20, 2014

Europe and Eurasia
Bank Valuations Tank as ECB Flubs Its Stress Test

Low market valuations (i.e., price to book ratios) for euro area banks reflect market concerns over their capital cushions, opined the Bank of England just prior to last-year’s launch of the ECB s…

Bank Valuations Tank as ECB Flubs Its Stress Test

November 10, 2014

Monetary Policy
Paul Krugman Calls for "Weak-Dollar Policy"...Towards Mars?

Paul Krugman routinely mocks Germany for wanting “everyone to run enormous trade surpluses at the same time.” As Martin Wolf has put it, this is impossible, as “the world cannot trade with Mars.” …

Paul Krugman Calls for "Weak-Dollar Policy"...Towards Mars?

November 3, 2014

Europe and Eurasia
The ECB Fails to Stress Banks Over the One Critical Variable It Controls: Inflation

Relentlessly falling inflation is bad news for Eurozone banks.  It increases the real (inflation-adjusted) value of borrower debt and the real cost of servicing that debt.  It causes loan defaults…

The ECB Fails to Stress Banks Over the One Critical Variable It Controls: Inflation

October 27, 2014

Monetary Policy
Our Fed Dual-Mandate Tracker Affirms Taper Timing

St. Louis Fed President James Bullard continues to burnish his reputation as the FOMC’s least predictable member, reversing course on policy for the second time in 3 months—going from dove to hawk…

Our Fed Dual-Mandate Tracker Affirms Taper Timing

October 10, 2014

Monetary Policy
Are Fed Doves Mucking with Future Unemployment Estimates to Justify Dovishness?

Do Fed doves and hawks get their aviary classifications based on their cold, hard analysis of data, or is it the reverse – do they select data points to justify their dovish or hawkish perspective…

Are Fed Doves Mucking with Future Unemployment Estimates to Justify Dovishness?