Publication Date: April 2019

Drawing from a 2018 conference, the Hoover Institution brings together leading academics and monetary policy makers to share ideas about pressing questions facing central banks today. The expert contributors address big-picture debates affecting US and global monetary policy and apply cutting-edge economic research to the international monetary and financial system—areas very much related because of the effect of balance sheet operations on exchange rates and capital flows.

The discussion is broken down into seven key areas: (1) International Rules of the Monetary Game, (2) Banking, Trade and the Making of the Dominant Currency, (3) Capital Flows, the IMF’s Institutional View, and Alternatives, (4) Payments, Credit, and Asset Prices, (5) Financial Stability, Regulations, and the Balance Sheet, (6) The Future of the Central Bank Balance Sheet, and (7) Monetary Policy and Reform in Practice.

With in-depth discussions covering the size of the Fed’s balance sheet, the role of government in encouraging or restricting capital flows, the volatility of capital flows and exchange rates, and many other pressing policy questions, they examine relevant research developments and argue options for reform.

Contributors: Adrien Auclert, Raphael Bostic, Sebastian Edwards, Peter R. Fisher, Esther L. George, Gita Gopinath, Oleg Itskhoki, Robert S. Kaplan, Mickey D. Levy, Lorie K. Logan, Prachi Mishra, William Nelson, Jonathan D. Ostry, Monika Piazzesi, Charles I. Plosser, Randal K. Quarles, Raghuram Rajan, Thomas J. Sargent, Martin Schneider, George P. Shultz, John B. Taylor, Paul Tucker, Kevin Warsh, John C. Williams

For more information, visit the Hoover Press; or download PDFs of individual chapters below.


Table of Contents/ Preface


Chapter 1: International Rules of the Monetary Game
by Prachi Mishra and Raghuram Rajan
Discussant: Thomas J. Sargent
General Discussion: John H. Cochrane, Michael D. Bordo, Sebastian Edwards, Gita Gopinath, Paul Tucker, Raghuram Rajan

Chapter 2: Dollar Dominance in Trade and Finance
by Gita Gopinath
Discussant: Adrien Auclert
General Discussion: Juliane Begenau, Michael D. Bordo, Juhi Dhawan, Robert Hall, Michael Melvin, Robert Heller, Jim Dorn, John Smyth, John H. Cochrane, Andrew T. Levin,
Paul Tucker, George P. Shultz, Gita Gopinath

Symposium on: Capital Flows, the IMF’s Institutional View and Alternatives
Introduction by George P. Shultz

Chapter 3: Managing Capital Flows: Toward a Policy Maker’s Vade Mecum
by Jonathan D. Ostry

Chapter 4: The IMF’s Institutional View: A Critique
by Sebastian Edwards

Chapter 5: Capital Flows, the IMF’s Institutional View, and an Alternative
by John B. Taylor
General Discussion: Robert Hall, John H. Cochrane, George P. Shultz, John B. Taylor, Jonathan D. Ostry


Chapter 6: Monetary Policy with a Layered Payment System
by Monika Piazzesi and Martin Schneider
Discussant: Oleg Itskhoki
General Discussion: Michael D. Bordo, Arvind Krishnamurthy, Robert Hall, Jeff Lacker, Martin Schneider

Chapter 7: Liquidity Regulation and the Size of the Fed’s Balance Sheet
by Randal K. Quarles
Discussant: Paul Tucker
General Discussion: Andrew T. Levin, Charlie Siguler, Donna Borak, Sebastian Edwards, William Nelson, Michael D. Bordo, Randal K. Quarles, Paul Tucker

Symposium on: The Future of Central Bank Balance Sheets
Introduction by Kevin Warsh

Chapter 8: Normalizing the Federal Reserve’s Balance Sheet and Policy Implementation
by Lorie K. Logan

Chapter 9: Get Up Off the Floor
by William Nelson

Chapter 10: The Fed’s Balance Sheet Strategy: What Now?
by Mickey D. Levy

Chapter 11: Should the Fed ‘Stay Big’ or ‘Slim Down’?
by Peter R. Fisher
General Discussion: John H. Cochrane, Andrew Levin, Kevin Warsh, Lorie K. Logan, William Nelson, Mickey D. Levy, Peter Fisher


Chapter 12: Anchoring Inflation Expectations in a Low R-star World
by John C. Williams
General Discussion: Robert Heller, John C. Williams, Sebastian Edwards, Beat Siegenthaler

Symposium on: Monetary Policy and Reform in Practice
Introduction by Charles I. Plosser

Chapter 13: Monetary Policy and Reform in Practice
by Esther L. George

Chapter 14: US Economic Conditions and Monetary Policy Considerations
by Robert S. Kaplan

Chapter 15: Remarks
by Raphael Bostic
General Discussion: Paul Tucker, Mickey D. Levy, Michael D. Bordo, William Nelson, Andrew Filardo, Charles I. Plosser, Robert Kaplan, Esther L. George, Raphael Bostic

About the Contributors and Discussants
About the Hoover Institution’s Working Group on Economic Policy

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