monetary policy

Why would I be writing about ‘danger’ when we are experiencing the first synchronized global economic upturn in over 8 years? It’s the business cycle.

My model of interest rates and currencies says that long-term yields are just an amalgam of short-term yields with a term premium tacked on. There’s nothing there about money flows from people moving money to where yields are highest. I…

Tax cuts in the US will accelerate the Fed’s timetable and increase the potential of curve inversion and eventual recession.

If you look at the yield curve since the early 80s double dip recession, what you’ll notice is that inversion – where 2-year rates exceed 10-year rates - precedes every recession. Right now, we’re still 70 basis points from inversion…

Three years ago, the Fed had begun tightening and all other central banks were still on easy street. Now, we are at an inflection point where other central banks are likely to tighten more than the Fed. That’s negative for the US dollar and…

I am a sceptic of thinking about low unemployment as a bad thing – which is what people who think about policy in terms of the Phillips curve do. Now a study by the Philly Fed is saying that the Phillips Curve is a poor forecasting tool.…

As the Federal Reserve meets at Jackson Hole this week, I thought now would be a good time to talk about the limits of monetary policy - and why monetary policy alone cannot restore robust growth. And as I write this I want to make clear…

This is going to be a quick follow-on to the last post on monetary policy as the only game in town. I feel like the obvious question that post doesn’t answer is this one: what other policy tools we should use? And I want to tee up that…

I see that Dartmouth economics professor Danny Blanchflower is talking about slack in the US labour market because he believes the Fed is premature in assessing its full employment mandate as fulfilled. I have a few thoughts on this issue I…

I don't know if there is a German housing bubble or even whether there will be one. I do know that we hear a lot about it in the press - the result of zero, even negative, interest rates. So let me give you a little anecdote from my trip to…