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Finance and Econ From the Web: Night lights measure growth, why are rates so low, are bankers liberals or conservatives….

September 19, 2018 Bilal 0

I thought I’d have a separate “Best Of the Web” devoted to economics and finance. Below I’ve found 30 articles and academic papers on macro and finance. Some are easy reads and others are denser, but I’ve summarised each one. Oh, if you come across anything interesting that I’ve  missed, then flag it to me and I’ll include it in my next list.  Enjoy! North and South Korea at night , 1992 vs 2008

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FROM CHRONIC INFLATION TO CHRONIC DEFLATION Focusing on Expectations and Liquidity Disarray Since WWII

September 2, 2018 Bilal 0

http://pubdocs.worldbank.org/en/766231464121854489/Calvo-Macro-PAPER.pdf Guillermo Calvo1 Columbia University www.columbia.edu/~gc2286 Abstract. The paper discusses policy relevant models, going from (1) chronic inflation in the 20th century after WWII, with special emphasis on Emerging Market economies to (2) chronic deflation and related phenomena, e.g., liquidity crunch and Sudden Stop that got exacerbated after the 2008 Lehman crisis. The discussion highlights the importance of expectations and liquidity, and warns about the risks of relegating liquidity to a secondary role, as has been the practice in mainstream macro models prior to the Great Recession. Liquidity disarray, in particular, makes it evident that the international monetary order calls […]

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Goldman: “Price pressures seem to be everywhere except the inflation statistics”

September 2, 2018 Bilal 0

Goldman: “Price pressures seem to be everywhere except the inflation statistics” https://ift.tt/2P3jbrx A few brief excerpts from a Goldman Sachs research note: Bottlenecks and Price Pressures: Pushing on a String… or Pushing Through? Company commentary and business surveys increasingly highlight bottlenecks and price pressures, as well as a growing shortage of workers in the trucking, healthcare, and construction industries. Yet despite tight labor markets and rising input costs, core PCE inflation has yet to exceed 2 percent on a sustained basis. To paraphrase Robert Solow, price pressures seem to be everywhere except the inflation statistics.…Barring a sizeable rebound in capital […]

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Nominal price stickiness and real exchange rate fluctuations

September 2, 2018 Bilal 0

Nominal price stickiness and real exchange rate fluctuations https://ift.tt/2MhramW Economists have often interpreted the observation that movements in real exchange rates are large, persistent, and closely track movements in nominal rates while cross-country differences in inflation rates are small and stable as direct evidence for nominal price rigidities. This column uses the microdata behind the construction of the consumer price index to isolate the real exchange rate for the subset of goods that change prices. This ‘reset exchange rate’ moves with the real exchange rate, suggesting that sticky prices are not a primary factor in dampening the response of inflation […]

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Inflation targeting and large shocks

September 2, 2018 Bilal 0

Inflation targeting and large shocks https://ift.tt/2BjD8Yp Can a country’s monetary policy framework help absorb large adverse shocks? Inflation targeting (IT) has become a dominant framework for monetary policy over the last two decades. The costs of cleaning up after the Global Crisis, however, dramatically changed the perception of IT, because a narrow focus on consumer prices may miss a build-up of financial imbalances (Frankel 2012). As a result, researchers and policymakers are now calling for a refinement of the IT framework, allowing more flexibility (Svensson 2009). As Reichlin and Baldwin (2013) put it, IT can be perpetrator, bystander or saviour […]

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Why isn’t inflation higher?

August 31, 2018 Bilal 0

Excess reserves held at the Fed are down from their peak of about $2.8 trillion, but still close to $2 trillion , massively higher than their long-run historical average. Inflationary pressures are modestly higher than they had been, but still in the range of roughly two percent. Source: Why isn’t inflation higher?

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Market Power and Monetary Policy

August 31, 2018 BIS 0

Speech given by Andrew G Haldane Chief Economist Bank of England. Market power, concentration and mark-ups have all gone up, especially top quartile. Puzzle with macro.

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Monetary policy in the age of Amazon

August 30, 2018 Urbanomics 0

Focuses on one of the recent Jackson Hole papers which argued that online competition is making prices less sticky. This has implications for central bankers who assume (downward) stickiness in prices. It means central banks should focus less on inflation and care more about output volatility.