Monetary Policy


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Analysis and Commentary

Fiscal Theory Of Monetary Policy

by John H. Cochrane via Grumpy Economist
Friday, April 13, 2018

Teaching a PhD class and preparing a few talks led me to a very simple example of an idea, which I'm calling the "fiscal theory of monetary policy." The project is to marry new-Keynesian models, i.e. DSGE models with price stickiness, with the fiscal theory of the price level. The example is simpler than the full analysis with price stickiness in the paper by that title.

Analysis and Commentary

What About Capital?

by David R. Hendersonvia EconLog
Tuesday, April 10, 2018

In his post this morning, co-blogger Bryan Caplan attributes increased worker productivity to two factors:
1. Practice.
2. Management.



by John H. Cochrane via Grumpy Economist
Friday, April 6, 2018

Economists delight in unravelings -- behavioral responses that undo bright ideas. A subsidy for skunks produces cats with white stripes. Two good ones came up this week.

In the News

Situs Newswatch: John B. Taylor Discusses Washington’s Impact On The Economy

featuring John B. Taylorvia Situs Newswatch
Tuesday, April 3, 2018

Situs executives heard from a world-renowned economist and former Under Secretary of the Treasury for International Affairs, John B. Taylor, earlier this month at the Pension Real Estate Association’s (PREA) Spring Conference.Known for his “Taylor Rule,” which advises central banks on how they should respond when inflation and economic output deviate from ideal levels, he offered a broad perspective of where the economy is heading.

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Senator Portman on Why the New Tax Bill Helps the Middle Class

interview with Robert Portman via Uncommon Knowledge
Thursday, March 29, 2018


The Positive Effects of the New Tax Bill Are Already Being Seen. 

In the News

Conservative Economists Turning Back To Debt Hysteria

featuring Michael J. Boskin, John H. Cochrane , John F. Cogan, George P. Shultz, John B. Taylorvia New York Magazine
Thursday, March 29, 2018

It is a foundational belief of Republican Party doctrine that tax cuts cannot have any adverse impact on the national debt. Indeed, Republicans have invented a new language in which budget deficit does not actually mean the difference between revenue and outlay at all. It is a term used exclusively to express panic over social spending.


Market Is The Best Predictor Of Future GDP Growth: Ed Lazear

interview with Edward Paul Lazearvia After the Bell (Fox Business)
Wednesday, March 28, 2018

Hoover Institution fellow Ed Lazear discusses the economic outlook for the US.

In the News

Fed Should Consider Establishing Digital Cash

quoting Michael D. Bordovia E21
Wednesday, March 21, 2018

Although privately-issued digital currencies (such as bitcoin and ethereum) are increasingly popular, they do not fulfill the three primary functions of public money: acting as a unit of account, a medium of exchange, and a store of value. In a new paper presented earlier this month at the Shadow Open Market Committee, Professor Michael Bordo of Rutgers University explains the merits of launching a central bank digital currency (CBDC), drawing on his joint research with Professor Andrew Levin of Dartmouth College.

Interest Rates
In the News

Taylor Rule Utility

featuring John B. Taylorvia Federal Reserve Bank of Atlanta
Wednesday, March 21, 2018

The Taylor rule is an equation John Taylor introduced in a 1993 paper that prescribes a value for the federal funds rate—the short-term interest rate targeted by the Federal Open Market Committee (FOMC)—based on the values of inflation and economic slack such as the output gap or unemployment gap. 


Bear Stearns Anniversary

by John H. Cochrane via Grumpy Economist
Wednesday, March 14, 2018

Justin Baer and Ryan Tracy have an excellent article in the Wall Street Journal commemorating the tenth anniversary of the Bear Stearns bailout.


Economic Policy Working Group

The Working Group on Economic Policy brings together experts on economic and financial policy to study key developments in the U.S. and global economies, examine their interactions, and develop specific policy proposals.

Milton and Rose Friedman: An Uncommon Couple