Finance

Understanding QE3

The U.S., in aggregate, acts as a bank to the rest of the world. The precise role of that bank has evolved over the course of the crisis.

The first graph shows US financial flows over the past five years.

One silence, and one silo

I am late to the party on the inventive use of copper by Chinese companies seeking alternative sources of funds.

And heading where?

Updating Hawtrey for the Shadow Banking System

Fed to the Rescue?

I interviewed Victor Shih, political scientist at Northwestern, at INET’s Bretton Woods conference earlier this year.

Grand Bargain at last?

Alchemy or Banking?

Two FT pieces by Tracy Alloway caught my eye this week: this article from Tuesday’s print edition, and this post on Alphaville today.

A Monetary Rorschach Test

Last time, I looked at the Chinese property market. The last link in that chain of financial interlinkages is the People’s Bank of China, the Chinese central bank.

The view from BIS

The Political Economy of Debt

Liquidity versus Solvency

New Thinking about Modigliani-Miller

The Chinese property market may finally be boiling over; there are certainly enough signs that the bubble is ready to burst.

A New Glass-Steagall?

We continue to learn about what the Fed did during the crisis.

As a matter of accounting, if the U.S. as a whole buys from the rest of the world more than it sells to the rest of the world, then it must, on net, also be borrowing from the rest of the world. Perry has previously put this into a money-view context.

Bailout, Default, or Plan C

Further Thoughts

Sense about Social Security

These days, one hears worries of impending inflation.

Currencies or Commodities?

Breaking the Silence

Learning How to Swap

The Term Securities Lending Facility (TSLF) was one of the bigger (in dollar terms) emergency programs implemented by the Fed during the crisis of 2008.

An Interview with the Author of “The New Lombard Street: How the Fed Became the Dealer of Last Resort”

War Reparations, or Prosperity

And what was QE about anyway?

In my last post I argued that if we want a Fed that is ready for the next crisis, we had better understand what happened to it during the last one.

In a classic book and subsequent articles, Obstfeld and Taylor (2004) have shown how the broad contours of international financial history over the past century and a half can be well understood by appealing to the famous economictrilemma which emerges from the standard Mundell-Fleming model many of us still teach our undergraduates.

The euro area’s sovereign debt crisis continues though significant steps have been taken to resolve it.

In preparing this paper I have decided not to embark upon the decades-old issue of optimal-currency areas and governance as such. I assume that one of my colleagues on the panel will do that. Instead I will present an historical case of over-indebtedness of parts of a common-currency area somewhat similar to the present challenge of Europe, or rather of the Euro area with its common currency.

The theme of this session is very timely and controversial, on the ability of sovereign governments to supervise Large Complex Financial Institutions (LCFIs), now officially described as G-SIFIs, global systemically important financial institutions.

The presentation explains that Indian Economy is basically a market-oriented economy with constant rebalancing between state andmarket.

Many companies around the world have discovered they can benefit financially from integrating environmental, social and governance (ESG) targets in their daily operations and strategy.

Simon Johnson at the Institute’s 2011 Annual Conference.

The Institute for New Economic Thinking held its second annual plenary conference in Bretton Woods, New Hampshire.

Tonight I will talk briefly about the Keynes-Hayek relationship, then will focus on some of Hayek’s insights that may be of relevance today.

Central to John Maynard Keynes (1941) original Bretton Woods proposal was an international clearing union that would issue a new international currency by fiat called bancor. Among other functions, this international central bank would finance the stabilization of individual commodity prices through commodity buffer stocks.

For more than three decades, orthodox economists, policy makers in government and central bankers and their economic advisors, using some variant of old classical economic theory [OCET], have insisted that (1) government regulations of markets and large government spending policies are the cause of all our economic problems and (2) ending big government and freeing markets, especially financial markets, from government regulatory controls is the solutionto our economic problems, domestically and internationally.

It’s a singular honor to have been asked to deliver the Butlin Lecture. I first met Noel Butlin when I had the pleasure of visiting Australian National University for two months in what was, from my perspective, the summer of 1985.

Some questions can only be answered by educated guess. The question at the centre of this round table pertains to this category. We should not be ashamed of this kind of limitation of our capacity to predict the future.

The Fed changed over the course of the global financial crisis.

(Way) Beyond Diamond-Dybvig

But not by him

The illusion of black swan-proofing

Capital Flows, Cross-border Banking, Shadow Banking, and the Dollar

From MIT to IMF

Or Does It?

A Money View

Exit Strategies and the New Normal

What kind of “Minsky Moment”?

Financial Globalization and the Nation State

The concept of bank capital

Who’s afraid of finance?

The future of government mortgage support

A money view of the commodity bubble

Speculation, stabilizing or destabilizing?

Saving the (International) Dollar

When the survival constraint bites

And the nomination for best Perp Walk goes to…

And the nominees for Best Documentary are…

It is all about promises to pay in the future.

Before the dollar there was the pound, and after the dollar there will be something else.

Today’s Financial Times article: Report to highlight alleged conflicts of interest in Goldman’s dealings (Jan 12, 2011), Goldman’s pieties insult our intelligence (Jan 13, 2011)

GFC finance as war finance

This research project elaborates an original model of Keynesian demand-led growth and communicates Keynesian macroeconomic insights to a broad and diverse audience.

The project provides new ideas and policy proposals to contain the spread of systemic risk in the financial system through appropriate regulation of financial markets and intermediaries, as well as the design of monetary policy.

This research project develops a monograph on divergent stochastic time series that permits the modeling of capital, inventory, and financial capital in economies.

This research project develops an operational measure of systemic risk, as an input into the policy process by capturing the interaction of private and governmental sources of systemic risk during and in advance of the crisis.

Why is this a surprise?

Today’s Financial Times article: ECB: trick or Trichet (Dec 2)

Is raising required bank capital the answer?

What’s really going on with Europe’s bailout of the Irish Economy

The first thing to say about QE2 is that it is a very different operation from QE1.

The Institute joined DIME and Central European University in hosting a conference addressing a key question of economics today: How can we create a new macroeconomic theory that takes into account the true relationship of finance to the real economy and can more accurately anticipate crises?

Joseph Stiglitz at the Institute’s debut conference in Cambridge, UK (2010).

Presented at the inaugural Conference at King’s College

This paper asks, how empirical evidence does or does not influence economic thinking and theory. In particular, which role do calibration, statistical inference, and structural change play?

The global financial crisis—and the Great Recession that followed—have inflicted tremendous economic and social damage across the world. Thankfully, we now appear to be on the path to recovery—though it remains sluggish and uneven, and in need of continued policy support in many advanced economies.