Stephen Grenville, 22 June 2013

Chairman Bernanke’s hints about the end of quantitative easing (QE) have produced volatility in financial markets. This column argues that financial markets were startled because an end to QE is likely to cause capital losses for bond holders since term premium is substantially negative. Bank regulators should be alert to the possibility. This fundamental explanation is teamed with widespread confusion among market participants about how quantitative easing actually works.

Laurence Ball, 28 February 2012

What explains Bernanke’s caution as Fed chair? This column argues that one possible factor is ‘groupthink’, where individuals go along with what they perceive as the majority view. Many of the Fed’s features – its tradition of decision-making by consensus, limited interaction with outsiders, and atmosphere of camaraderie – encourage groupthink. And Bernanke’s personality, often described as modest and unassuming, may have reinforced the effects of groupthink.

Tommaso Monacelli, 31 August 2007

The public is overreacting to the current turmoil in financial markets. The turmoil is most likely a situation where very specific problems are spread out extensively across investors and countries and thus the defaults are benign.

Events

CEPR Policy Research