Thursday , June 21 2018
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Tony Yates: Long and Variable

Long and Variable is a blog about monetary policy and central banks. Authored by Professor Tony Yates (University of Birmingham), this blog is quite detailed and knowledgeable about global monetary policy.

Social care funding, inheritance tax and hypothecation

Social care funding is as pressing now as when the issue blew up Theresa May’s 2017 attempt to decimate the Labour Party and assert control over the Brexit process.  A consensus of sorts seemed to emerge from that discussion that it was right to expect those who would otherwise pass on large estates to pay for their social care either partly or wholly through taxes on those estates, levied after death or not. I blogged at the time that I didn’t think this was ‘fair’.  My reasoning was...

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Interest rate forecasts, again

I hope someone can correct me here, but I dimly remember a Stanley Fischer chapter in the old Handbook of Monetary Economics, on central bank independence, that carried an entertaining footnote.  In it, Fischer reports that he showed a draft of the chapter to Milton Friedman, who retorted something like ‘central bankers only have 2 objectives, maximising discretion and avoiding public scrutiny’. Recent discussions about whether the Bank of England should publish interest rate forecasts...

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MPC’s discussions on publishing forward interest rates

I gleaned from the Guardian’s liveblog of the Treasury Committee hearing this morning that Carney disclosed that the Bank of England’s Monetary Policy Committee had discussions on whether to publish interest rate forecasts. A majority were not in favour, so they are sticking to the status quo.  I think it’s hugely positive that such discussions were had, and that it has been disclosed that they took place.  Whether or not to publish such a forecast seems to me to be a matter that has...

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Democracy’s vortex

I had a go at rewriting old blogs about the perceived-grievance-wrong-headed-sop-vortex that we might be headed into. …. According to Idealised Democracy 101, the way things are supposed to proceed is this: when something goes wrong in the economy, or the polity, as it inevitably will, the prospect of holding office encourages politicians to put together solutions, based on a sound diagnosis of the problem. Competition between aspiring rulers incentivizes finding good solutions and...

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Eurozone monetary and fiscal policy

Simon Wren Lewis writes despairingly about the state of Eurozone fiscal policy;  Northern core countries like Germany, France and the Netherlands pursuing zero deficits or surpluses, at a time when ECB interest rates are at the effective lower bound, and core inflation is stubbornly well below its 2 per cent target.  Endorsing his post in its entirety, I have just a few things to add. Tight fiscal policy would not be a problem if unconventional monetary policy [buying sovereign and...

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What did Monty Python metaphors ever do for us?

Tim Harford’s excellent adaptation of Monty Python in the face of generalized attacks on the economics discipline rather overshadows the other contributions, including mine, to the FT pieces published as a response to the Tom Clark / Chris Giles debate. The piece by me was a crop of what I am reposting below, reproduced because the FT version does not contain the hyperlinks to other work, which were there to make a point about what is actually out there in econ that you can read.  And...

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A neo-Fisherian experiment that hedges its New Keynesian bets

The experience of a country like Japan, where interest rates have been at their floor for 2 decades now, and inflation is still undershooting the BoJ target of 2 per cent, is enough to test the faith of a New Keynesian and make one wonder whether the neo-Fisherians have a point.  They maintain that inflation undershoots the target because of very low interest rates, not despite them.  New Keynesians deduce from their version of the model that a temporary interest rate cut raises...

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Phillips Curve bashing and immaculate inflation

A few points prompted by the recent exchange between David Andolfatto and Paul Krugman, and the recurrent phenomenon of comment pieces on the demise of the Philips Curve.  These pieces are hot lately because of the surprising coincidence of falls in unemployment with a failure of inflation to pick up materially, particularly in the UK and the US. First, fluctuations in the correlation between unemployment and inflation – which have been a thing ever since I can remember paying...

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Konig-Krugman fiat fundamentalism and Bitcoin

JP Konig writes as engagingly as ever about whether Bitcoin and central bank fiat currency differ in possessing inherent value, and what underpins their value.  He takes Paul Krugman’s side. Krugman points out, correctly, that governments accept, in fact demand payment of taxes using the currency of its own central bank.  The same of course does not apply to Bitcoin or any of the other crypto-currencies.  At least not yet.  This, he says, is what underpins the value of fiat currency....

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