Sunday, 28 August 2016
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    Interest rates

    Don’t blame central bankers for persistently low interest rates

    August 23, 2016
    Many who are supportive of free markets blame central banks for the low interest rates that have prevailed since the end of the 2007-8 financial crisis.  This is a mistake. Central banks can, in the short run and all else being equal, lower market interest rates through expansionary open market operations.  But this ‘liquidity effect’ […]
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    Natural rate of interest: Is it that low?

    August 10, 2016
    One of the open questions since the subprime crisis is whether or not the natural rate of interest is as low as the federal funds rate. The natural interest rate is the rate that equilibrates production over time. However, this concept is more subtle than output being equal to potential output– it also implies that production is distributed […]
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    On the Italian and eurozone doomsday scenario

    July 27, 2016
    This article appeared in the June 2016 issue of Globe Asia. On June 23rd, the voters in the United Kingdom (UK) turned a collective thumbs-down on the European Union (EU). The Brexit advocates – the ones who had had enough of the EU’s mandates and regulations – won the day. But, this is only the first […]
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    The monetary ripples of Brexit

    July 20, 2016
    June 23 will most likely be remembered as a turning point in Britain’s fate, as 17.4 million Britons expressed their desire to sever ties with the European Union (EU) in a historic referendum. The British, and global, economy is facing an imminent cloud of uncertainty. From the moment that the markets opened, and crashed, last […]
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    Austerity isn’t failing, big government is

    July 18, 2016
    Bill Emmott at Project Syndicate claims that austerity is failing—just look at the poor European recovery after the financial crisis and the weak Japanese economy. Austerity is not working and therefore it is time to turn fiscal and increase government spending. This is the core of Emmott’s argument. Don’t forget, however, that he considers the Eurozone […]
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    Against monetary democracy

    July 13, 2016
    Thanks in part to high-profile and controversial public policy since the financial crisis, and to a lesser extent politicians such as Ron and Rand Paul, the monetary and financial arrangements of the United States have become a surprising source of public indignation.  Monetary and financial policy, previously a subject that would put almost all voters […]
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    On Brexit

    July 6, 2016
    There has been a strong (and I’m inclined to say emotional) negative reaction to the Brexit. But really, it doesn’t have to be the end of the world for the British economy. Being a member to the European Union (EU) imposes two constraints.  First, there is an upper constraint on how much economic freedom a country may have […]
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    Macro Musings Podcast

    June 27, 2016
    If you are a fan of podcasts, let me recommend this relatively new one hosted by David Beckworth at the Mercatus Center. David’s views on the Great Recession are quite similar to those expressed by me and others on this blog. His list of guests to date includes John Taylor, John Cochrane, George Selgin, Scott […]