Recent Posts

Sunday, August 2, 2015

Comments On Contemporary Inflation Control

Since the 1970s, conventional thinking about macroeconomics was consumed with the challenges of inflation control. This led to entrenched dogma surrounding inflation targeting and central bank independence. However, since the end of the financial crisis, there has been more discussion of the issues posed by slow growth -- although I believe that inflation control would come to the forefront if inflation rates started to rise again. In this article, I give a summary of why I think inflation will probably continue to remain relatively low in the developed countries, even taking into account what I see as politically feasible policy shifts.

Wednesday, July 29, 2015

Has The Bond Market Been All Wrong on Inflation?

Daniel Kruger had a recent article at Bloomberg "Bond Markets Got It All Wrong When It Comes to Biggest Foe." Although it is entertaining to point out market inefficiencies, this particular analysis is not particularly fair. And in particular, the short life of the TIPS market (U.S. inflation-linked bonds) means that we cannot say too much about the market's track record.

Sunday, July 26, 2015

Primer: What Is A Taylor Rule?

A Taylor Rule is a rule that suggests what the level of a central bank’s policy rate should be. The name is taken from what is now known as “the” Taylor Rule, which appeared in the paper, “Discretion versus policy rules in practice,” by Professor John B. Taylor of Stanford University (Carnegie-Rochester Series on Public Policy, 39, 1993). (I will henceforth refer to that paper as [Taylor 1993], since he has since proposed improved rules.)

Saturday, July 25, 2015

Data Tools - Dealing With The FRED HTTPS Migration In Python

The FRED Economic Data System provided by the St. Louis Fed has a programming interface (an API)  which I use to stock the database in my personal research system. The interface is switching over to use the secure HTTPS protocol (from HTTP), and this means that code needs to be updated. I use Python to access the database, and I ran into issues. I am now describing how I worked around the problems.

I assume that the reader knows Python; this is not a tutorial on how to use the fred package in Python. (I expect that I will eventually write tutorials on those lines.)

Wednesday, July 22, 2015

Book Review: The Solution is Full Reserve/100% Reserve Banking

Ralph S. Musgrave's book argues that The Solution is Full Reserve/100% Reserve Banking. However, even after reading the book, it is unclear what real-world problem full reserve banking is the solution for. Despite its length (130 pages), the reader is expected to wade through the literature elsewhere to find the details.

Thursday, July 16, 2015

The Greek Fix

At the time of writing, the Greek Crisis of (Summer) 2015 appears to be winding down. The economic crisis should calm down, although the political situation appears to be heavily damaged. The crisis will only flare up once slowing global demand pushes the larger euro area economies back into recession. Brief comments follow.

Wednesday, July 15, 2015

Bank Of Canada Cuts

In a not very surprising step, the Bank of Canada cut rates again. This probably the low in rates, as the money markets stopped functioning properly at a lower policy rate. Meanwhile, "quantitative easing" makes no sense in the Canadian context. (I described the Canadian monetary system in Understanding Government Finance, and the lack of bank reserves means that it operates somewhat differently than other systems, such as the United States.)