ECB economists have a nice paper on the topic. It has a nice title – Dancing together at arm’s length? – The interaction of central banks with governments in the G7.
Archive for October, 2010
Two speeches. One by Korean Central Bank Governor Chogsoo Kim and other by Bank of Thailand Deputy Governor Dr. Bandid Nijathaworn. Both highlight the risks from capital inflows and managing impossible trinity in their economies.
First Korea. Kim says there are two issues – First capital flows are procyclical and second managing them leads to working against impossible trinity.
I am late on this. Just discovered Justin Lin has started a blog called Let’s talk development.
I hope we get some interesting ideas on development from Lin and it continues. There are many such blogs started but never carried on with the same vigour.
THis is the title of a new paper I have written. In this I summarise the debates going in US over economic outlook and various policy options.
My reading (little bit though) of Japan in 1990s and US now is in a liquidity trap situation (when central bank policy rate is zero/near zero), a central bank has many options. However, there are two issues. One, their effectiveness is limited. Two, some measures are not practice and cannot be adopted. And when one adds numerous economists’ arguments over benefits and negatives of each option, it is all chaos. Then political situation always plays a major role. With a dip in taxes and surge in expenditure the, government is on shaky grounds. They might want to stimulate but concerns of budget deficit/fiscal multiplier always muddles the whole thinking. Hence, it may not be a liquidity trap but surely a policy trap.
Let me know your comments.
John Cochrane of Chicago Univ has an option for Fed:
Peterson Institute for International Economics and Bruegel Thinktank organised a conference titled – The Transatlantic Relationship in an Era of Growing Economic Multipolarity.
In it there was an interesting paper presented by Jean Pisani-Ferry and Adam S. Posen. They say the policies in EU and US converged as the crisis started and have diverged as crisis situation eased. They look at a number of reasons for the above behaviour and summarise the findings:
Here is the news release.
The last time England’s ‘Barmy Army’ came to Australia for an Ashes series they mocked the locals by singing: “We’re fat, we’re round, three dollars to the pound.” But that’s unlikely to be the case during this year’s Ashes series as the global financial crisis and the soaring Aussie dollar have dramatically cut the number of English tourists travelling to Australia to support their team, reports said Sunday.
Around 37,000 British fans travelled to Australia to watch a 5-0 drubbing in the last Ashes series here four years ago.For fans making the journey this time the cost in exchange-rate terms will be more than 50 percent higher. Cricket Australia said that thousands of tickets reserved for tourists might be reallocated to locals as it becomes apparent numbers will be well down on those who visited during the 2006-07 Ashes.
“We will be doing a review in mid-November and it is possible that some of the tickets allocated to inbound tourism that are returned to Cricket Australia are put back onto the market to become available to the Australian public,” CA spokesman Peter Young told the Sun-Herald. “If that happens, there could be a few more tickets available to venues that are currently sold out of general admission tickets.”
How economics affects Cricket…This will be sad though. The upcoming Ashes series is a much anticpated event. Without Barmy Army it would not be as much fun..
I mam trying to read the papers presented at this Boston Fed conference – Revisting Monetary Policy in Low Inflation Environment.
I was reading this Laurence Meyer paper where he looks at Fed policy in this crisis and their impact.
First how much did Fed’s purchases of assets (QE) impact US Treasury? He says a Fed program of USD 400 bn lowered 10 yera treasury by 13 bps. There are 3 more studies in the estimate of 13-14 bps. As all similar, he says they must be true!!
Now, I just discovered another of his interesting paper (via the references on China after 1979 paper). It talks about the Needham Puzzle. Needham was an economic historian who points China was a strong economy with good institutions in 14th century. Then why did the industrial revolution only happen in UK (& Europe) and not China? This Lin refers to as Needham Puzzle.