Thresholds versus Triggers

Fed Chair nominee Janet Yellen believes that the Fed will keep rates at zero long after the 6.5 unemployment threshold, according to news reports. Yellen made the comments responding to an inquiry by Massachusetts Senator Elizabeth Warren…

The limits of monetary policy, part 2

In the aftermath of the financial crisis, policy makers’ aversion to fiscal policy is still large. So monetary policy rules the roost. With developed economies burdened by low growth, unemployment, and high levels of debt, monetary agents…

The limits of monetary policy, part 1

On Thursday, Philadelphia Federal Reserve President Charles Plosser gave a speech on Thursday called “A Limited Central Bank” that I highly recommend. The underlying theme of Plosser’s speech was that central banks should have a limited…

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