An interesting statistics from the economists (thanks to Shaakira) : South Africa is the second country in the world in term of working hours lost for labour disputes. The data is for 2009 - a relatively quite year. This does not make monetary policy any easier - although monetary policy is not the main concern.
Tuesday, September 7, 2010
Thursday, September 2, 2010
The central bankers' burden
from Anthony Spyron
I thought this article is interesting in that it opens up the debate about the polarisation of monetary policy. Who is right and who is wrong ? Is it too soon to start tightening monetary policy through an increase in interest rates ? Is deflation a real possibility in some countries and how do central banks with very low rates counteract this danger ? Will tighter monetary control at this stage threaten economic recovery ?
I think deflation is unlikely at this stage. Consumer spending is gradually increasing and the longer there is no double dip the more confidence will increase (driving demand and increasing prices once again). I feel rates should in most cases remain constant for now with the exception of countries where recovery is already fully underway and where inflation has picked up. The real danger is how to introduce austerity measures in a still fragile period of recovery. It is also evident that monetary and fiscal policy need to be aligned.
It is certainly an interesting article. One aspect mentioned in the article that we will have to analyse further is the relationship between monetary policy and fiscal policy. One thing that the crisis has shown clearly is that monetary policy is just one instrument and not necessarily the most powerful - the fiscal instrument can have stronger and long lasting effects, but we have only imprecise knowledge on how the two instrument interact. Thank you for the contribution, it is exactly what I was looking for.
I thought this article is interesting in that it opens up the debate about the polarisation of monetary policy. Who is right and who is wrong ? Is it too soon to start tightening monetary policy through an increase in interest rates ? Is deflation a real possibility in some countries and how do central banks with very low rates counteract this danger ? Will tighter monetary control at this stage threaten economic recovery ?
I think deflation is unlikely at this stage. Consumer spending is gradually increasing and the longer there is no double dip the more confidence will increase (driving demand and increasing prices once again). I feel rates should in most cases remain constant for now with the exception of countries where recovery is already fully underway and where inflation has picked up. The real danger is how to introduce austerity measures in a still fragile period of recovery. It is also evident that monetary and fiscal policy need to be aligned.
It is certainly an interesting article. One aspect mentioned in the article that we will have to analyse further is the relationship between monetary policy and fiscal policy. One thing that the crisis has shown clearly is that monetary policy is just one instrument and not necessarily the most powerful - the fiscal instrument can have stronger and long lasting effects, but we have only imprecise knowledge on how the two instrument interact. Thank you for the contribution, it is exactly what I was looking for.
Wednesday, August 18, 2010
Liquidity Preference And Loanable Funds, Revisited - Paul Krugman Blog - NYTimes.com
In next week lecture I will talk of the monetary transmission mechanism and the term structure of interest rate. An useful starting point (or end point): Liquidity Preference And Loanable Funds, Revisited - Paul Krugman Blog - NYTimes.com. Cheers
Friday, August 13, 2010
"Fetters of gold and paper"
From Shaakira Karolia
This article from VoxEU, by crisis experts, Barry Eichengreen & Peter Temin, is particularly interesting as it uses the context of the gold standard during the Great Depression with reference to the current crisis in terms of the global imbalances in existence. This also brings to mind the much promulgated idea that most crises are, in all actuality, not drastically different...
This article from VoxEU, by crisis experts, Barry Eichengreen & Peter Temin, is particularly interesting as it uses the context of the gold standard during the Great Depression with reference to the current crisis in terms of the global imbalances in existence. This also brings to mind the much promulgated idea that most crises are, in all actuality, not drastically different...
Tuesday, July 27, 2010
More explanations of the recession
I will introduce some of the explanations given to the international financial crisis: the debate is still open and the discussion very interesting - here you find more ideas by leading economists on what can generate financial crisis : Risk panics: When markets crash for no apparent reason.
Thursday, June 17, 2010
The meaning of independence
A very interesting article from Adam Posen: it will be very useful when we will discuss Central Bank independence. Please keep in mind the following statement:
"The only way that central banks can credibly commit to price stability over the long-term is to
maintain a political constituency in civil society supportive of such a policy regime.That
support from civil society, not any legal statute, is what protects central banks when they make a
hard decision that angers politicians"
I hope we will have time to discuss this statement in the context of the South African debate about the independence of the central bank
"The only way that central banks can credibly commit to price stability over the long-term is to
maintain a political constituency in civil society supportive of such a policy regime.That
support from civil society, not any legal statute, is what protects central banks when they make a
hard decision that angers politicians"
I hope we will have time to discuss this statement in the context of the South African debate about the independence of the central bank
Subscribe to:
Posts (Atom)