In comments Mark Sadowski noted that short term real interest rates have fallen a lot since Ben Bernanke began announcing QE2. In earlier posts, I had considered only the 7 year constant maturity and the 5 year constant maturity series. I think that medium term real interest rates matter most for investment and that real […]
It has been asserted that many mortgage servicing contracts are inefficient, because they give the servicer incentives to foreclose even when re-negotiation would be better for the owner of the mortgage. An inefficiency is a profit opportunity. If there are such contracts, then a different contract can generate higher revenue for both the servicer and […]
This post is long, vague, sloppy and after the jump. The one sentence version is that the Fed can affect the real economy by buying assets which private investors consider risky. Before discussing useful things which I think the Fed can do to stimulate the economy, I will explain at length why I think that […]
Scott Sumner wrote If pressed, Keynesians will usually point to real interest rates as the right measure of monetary ease or tightness. By that criterion the Fed adopted an ultra-tight monetary policy in late 2008. Monetarists will usually say that M2 is the best criteria for the stance of monetary policy. By that criterion the […]
There is a new estimate of the effect of $ 60 billion spending cut on GDP and employment. Since this estimate was made by brilliant economist* Ben Bernanke aided by the staff of the Federal Reserve Board, it will get a lot of attention. Bernanke said that a $60 billion cut along the lines being […]
First I would like to stress again that I have great respect of Janet Yellen. I try to only critize people whom I respect (my posts show just how respectful I am in general). So this comment on her use of event studies is really a comment on event studies and not on Yellen in […]
Madison Wisconsin anti Scott Walker sign of the day via www.first-draft.com
When is an event ? Yesterday Janet Yellen said Event studies can therefore be helpful in gauging the financial market effects of such communications. [skip] Last August, the FOMC announced that it would begin reinvesting principal payments on agency MBS and agency debt into longer-term Treasury securities, and over the subsequent couple of months or […]
Do my eyes deceive me ? Is this the Washington Post ? Is Ezra Klein writing under the double pseudonym “Neil Irwin and Michael A. Fletcher” ? Irwin and Fletcher warn of two threats to the US economy — high oil prices and tea partiers (call it the Texas tea party menace). U.S. economic recovery […]
House spending cuts hurt U.S growth -Goldman Sachs By Richard Cowan WASHINGTON | Wed Feb 23, 2011 4:50pm EST [fair use skip] “Under the House passed spending bill, the drag on GDP growth from federal fiscal policy would increase by 1.5pp (percentage points) to 2pp in Q2 and Q3 compared with current law,” according to […]