Friday, 18 August 2017

Author Archives Nicolas Cachanosky

Knowledge Problem in Central Banking – Part II

August 3, 2017

The previous post presented Hayek’s knowledge problem in the context of the economic calculation debate under socialism. We discussed the distinction (sometimes overlooked) between information and knowledge . To sum up, information is objective data such as quantities and prices. As a qualitative concept, information can be complete or incomplete. Knowledge is subjective data interpretation. As a qualitative concept, […]

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Knowledge Problem in Central Banking – Part I

August 2, 2017

In my previous posts, Andreas Hoffmann and I discussed the problem of unintended consequences in monetary policy, particularly as applied to the U.S. Federal Reserve and the European Central Bank in the context of the 2008 crisis. This post tackles a related issue: the so called “knowledge problem.” This term was coined after Hayek’s engagement […]

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Unintended Monetary Policy Effects – Tale II: ECB Crisis Policies

July 16, 2017

The Federal Reserve’s (Fed) and European Central Bank’s (ECB) policy responses to the recent financial disasters offer two tales of unintended consequences. Our previous post outlined the undesired effects of the Fed’s policies. In this post, we suggest that the ECB’s stabilization policies did not only fail to achieve its goals. Monetary policy has also […]

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The Monetary Policy Blinders

July 10, 2017
in Blog

I just read Ben Bernanke’s “The Federal Reserve and the Financial Crisis.” The book was actually published in 2013, and it contains his 2012 lectures at George Washington University. It contains four well written lectures that cover the history of the U.S. Federal Reserve and the 2008 financial crisis. Some of the complexities of the […]

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Cantillon Effects and Money Neutrality

June 27, 2017

Money neutrality is a key principle in monetary economics. As might seem obvious, the amount of goods that can be produced depends on the availability of factors of production (such as capital and labor) and on technological knowledge. For instance, the fact that more dollars are in circulation does not mean we can produce more […]

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Fed’s Balance Sheet, IOR, and Uncertainty

June 13, 2017

It seems likely that in the coming months monetary policy discussion will start focusing on the problem of shrinking the Fed’s balance sheet. A particular challenge of shrinking the Fed’s balance sheet is that of discontinuing the policy of paying interest on reserves (IOR). While at first sight it might seem that the IOR is […]

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