RP’s Diary

At the conclusion of a recent star-studded IMF conference, chief economist Olivier Blanchard argued that we may need negative real interest rates for a long time. Here is the passage in full: “Now let me now turn to monetary policy, and touch on three issues: the implications of the liquidity trap, the provision of liquidity,…
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All the chest-beating about the financial crisis distracts attention from the fact that many parties gained from it. Governments – except for a few peripheral countries – obtained cheap financing. The US benefiited from a boost to international demand for the dollar, helping to put the euro in its place, just as a previous wave…
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I have written elsewhere about Mr Carney’s first 5 months (subscription) at the Bank of England. I showed that in terms of the goals he was set by the UK Treasury (both those stated and those unstated but implicit in his appointment), he has made remarkable progress – with luck playing a part. The UK economy has…
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To mark publication of the “bigger and better” 360-page paperback (at £16.99 from Amazon, with a new 38-page preface) this and the following  posts list the book’s main themes, by Chapter, each with an update. Seen from November 2013, how have recent developments changed the analysis and/or policy prescription? Currrent Economic Outlook Although the short…
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Recognising the public demand for reform, governments began a search for alternative policy models and structures soon after the outbreak of the global financial crisis (GFC). This can be viewed at national, regional and international levels. 5. Improving National Policies: At the national level this has taken the form of supplementing inflation targeting with various…
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The so-called international  monetary non-system has four serious weaknesses. They are as follows: first, the absence of incentives to governments to correct global payments imbalances; secondly, the system’s dependence on one national currency, the US dollar, to serve as the major international reserve currency; thirdly, a dysfunctional financial sector and, fourthly, the systemic liability to…
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Under present arrangements, finance too often acts as a malevolent force, rewarding private sectional interests at the expense of the public interest. This is because the globalisation of markets has run ahead of our power to control them. Properly harnessed, global finance could be, again, an enormously powerful force for good. Designing such a harness…
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We need two, inter-related, big reforms – first to the official international monetary system and secondly to banking/financial markets. The international monetary system The first class of reforms needs to start at the beginning – with new reflection on the true nature of money. This is the most fundamental, and yet unavoidable, question raised by…
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  Apart from the nomination of Janet Yellen  ( a lovely, motherly person) to lead the Fed, what has happened since we departed for our summer/autumn long vacation? As always, the view one takes depends on your perspective. Are you the driver of a car negotiating tricky twists and turns, looking for traffic coming at…
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Central bankers are still trying to rescue their monetary policy models with some additional twists such as forward guidance, but not engaging in the fundamental re-think needed. (If you need better authority than I for this assertion, please do read Bill White in the Dallas Fed series here). Paul Tucker tells us that the new…
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