The influence of the Taylor rule on US monetary policy

Pelin Ilbas, Øistein Røisland, Tommy Sveen 13 February 2013

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The Taylor rule has undoubtedly influenced the debate about monetary policy over the last 20 years. But has it directly influenced monetary policy? According to a survey by Kahn (2012), the answer seems to be that it has. The transcripts from the Federal Open Market Committee meetings include several references to the rule.

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Topics:  Monetary policy

Tags:  US, Fed, Federal Reserve, Taylor rule

Misplaced concerns about central-bank independence

Marco Annunziata 12 February 2013

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Concerns are rising that central-bank independence is at risk, already curtailed by governments eager to control all other levers of growth. The Japanese government’s none-too-subtle strong-arming of the Bank of Japan is one of the most blatant examples (e.g. King 2013).

But the current debate on the risks to central-bank independence misses the point.

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Topics:  Institutions and economics Monetary policy

Tags:  ECB, Fed, Central Banks, Federal Reserve, fiscal policy, independence

Is LTRO QE in disguise?

Jean Pisani-Ferry, Guntram Wolff 03 May 2012

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With the launching of the three-year longer-term refinancing operations (LTROs) in December 2011, the Eurosystem has entered new territory (see Wyplosz 2012). Its balance sheet (stripped out of foreign-exchange reserves and assets that have no relevance for monetary policy such as legacy assets of the national central banks) has jumped from about 5% of GDP before the crisis to about 10% in 2009–10 and now close to 18%.

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Topics:  Macroeconomic policy

Tags:  ECB, monetary policy, Fed, Bank of England

Bad forecasters can be good policymakers

Thomas J. Sargent, Martin Ellison 24 November 2009

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The value of the Federal Reserve’s Open Market Committee (FOMC)1 has recently been questioned in a highly provocative paper by two professors at the University of California, Berkeley. The two professors are husband-and-wife team Christina and David Romer, who are amongst the most influential economists in the world today. Christina Romer is Chair of the Council of Economic Advisers in the Obama administration and a co-author of Obama’s plan for recovery, and David Romer is the author of a very popular macroeconomic graduate textbook.

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Topics:  Macroeconomic policy

Tags:  monetary policy, Fed, forecast

Fiscal dimensions of central banking: the fiscal vacuum at the heart of the Eurosystem and the fiscal abuse by and of the Fed: Part 2

Willem Buiter 25 March 2009

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The Bank of England

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Topics:  Monetary policy

Tags:  ECB, Fed, Bank of England, fiscal backing

Fiscal dimensions of central banking: The fiscal vacuum at the heart of the Eurosystem and the fiscal abuse by and of the Fed: Part 2

Willem Buiter 24 March 2009

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Why has there not been quantitative easing in the Eurozone? Good question.

No treaty-based obstacle

There is no treaty-based obstacle to the ECB/Eurosystem buying Eurozone government securities in the secondary markets. Indeed, both the ECB and the 16 national central banks of the Eurosystem hold Eurozone government securities on their balance sheets. Article 101.1 of the Consolidated version of the Treaty Establishing the European Community reads as follows:

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Topics:  Monetary policy

Tags:  ECB, Fed, quantitative easing

Financial crisis resolution: It’s all about burden-sharing

Charles Wyplosz 20 July 2008

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An old and familiar debate is back. Should taxpayers bail out the US banking system, quite possibly the British and European ones as well? 

There are two standard views on the multi-trillion dollar question of who pays for getting us out of the financial crisis

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Topics:  Financial markets

Tags:  Sweden, Fed, Federal Reserve, subprime crisis, Japan, financial crisis, bailout, Bear Stearns, Fannie Mae, Freddie Mac

No relief for ECB’s status quo headache from rotation

Mika Widgrén 25 February 2008

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The most recent ECB Governing Council (GC) meeting on 7 February left the key ECB interest rates unchanged. The meeting took place in the aftermath of the Federal Open Market Committee’s (FOMC) hyperactive moves to reduce the target for the federal funds rate 75 basis points to 3.5% at an unscheduled FOMC meeting on 21 January and then another 50 basis points to 3.0% on 30 January.1

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Topics:  Monetary policy

Tags:  ECB, Fed, Governing Council

Federal Reserve policy actions in August 2007: frequently asked questions (updated)

Stephen Cecchetti 15 August 2007

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Editors’ note: This column updates the 13 August 2007 column on the same topic and includes a slightly revised version of the content of the earlier column.

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Topics:  Financial markets

Tags:  ECB, international financial crises, Fed, Subprime, subprime crisis

The perils of inflation targeting

Axel Leijonhufvud 25 June 2007

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To control the price level, Patinkin demonstrated many years ago, you need control of one interest rate and one nominal asset for which the private sector cannot produce a close substitute. Although the theory did not say so, in practice it was obvious that this nominal stock had better not be very small. Just the copper coinage would not do, for instance.

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Topics:  Monetary policy

Tags:  interest rates, inflation, inflation targeting, Fed