Tuesday, 25 October 2016
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    The contractionary, contradictory nature of negative interest rates

    October 12, 2016
    A negative interest rate imposed by a central bank on reserve balances of commercial banks is not an interest rate at all.  It is a tax.  As such, like all taxes, it transfers resources from the private sector to the government sector and has a contractionary effect on economic activity.  The European central banks and the […]

    Leonard Liggio lecture 2016: The classical liberal tradition of sound money

    October 10, 2016
    By Dr. Lawrence White Let me welcome you all to the capital of Latin America. And when I say capital, I mean that much of the financial wealth of Latin America is held with banks and fund managers across the street, here in Miami. And therein lies a lesson in the results of unsound money. […]

    Disappointing estimates of the natural rate

    October 5, 2016
    At the recent Jackson Hole meetings, John Williams, president of the Federal Reserve Bank of San Francisco, argued there has been a  “significant decline in the natural rate of interest, or r* (r-star), over the past quarter-century to historically low levels.” Regular readers of this blog might recognize the view, as I have expressed it […]

    Enhance prosperity and improve health: Slash regulations, please

    October 3, 2016
    This article appeared in Globe Asia. Productivity and economic growth continue to surprise on the downside in most countries. While there is a great deal of handwringing over the so-called productivity puzzle, little attention is given to the real elixir: freer markets and more competition. Indeed, the policy tide is moving in the opposite direction in […]
    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’ […]

    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 […]

    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 […]

    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 […]