tag:blogger.com,1999:blog-582368152716771238.post4800429611507952167..comments2019-03-23T12:36:04.643-05:00Comments on The Grumpy Economist: Fiscal theory of monetary policyJohn H. Cochranehttp://www.blogger.com/profile/04842601651429471525noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-582368152716771238.post-47805885621812949622018-06-02T17:57:37.762-05:002018-06-02T17:57:37.762-05:00OK, starting to understand this a bit.
Why doesn&...OK, starting to understand this a bit.<br /><br />Why doesn't the fiscal shock go to negative growth? Because the initial shock was unexpected and resulted in a sudden wealth shift, not a wealth loss.<br /><br />What happens when the fiscal shock is expected, "happens on a regular basis", say the traders? Then the inflation bounces around zero. Did I get that? <br /><br />Hence my uncertainty about future prices, finance may be well prepared for the next fiscal shock. Finance and its derivative industry might be preparing us for 1-1.5% deflation for ten years, to get paid back for prior expected inflation losses.Matt Younghttps://www.blogger.com/profile/08404998406161097199noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-11437514929776179692018-05-26T09:06:55.557-05:002018-05-26T09:06:55.557-05:00Beautiful graph and discussion of the real interes...Beautiful graph and discussion of the real interest rate since the 14th century https://voxeu.org/article/suprasecular-stagnationNancy Hammondhttps://www.blogger.com/profile/02254206433585567601noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-69573020178303907552018-04-17T16:37:07.443-05:002018-04-17T16:37:07.443-05:00Matt,
"So the monetary shock in 1973 takes a...Matt,<br /><br />"So the monetary shock in 1973 takes about ten steps over the next 50 years."<br /><br />That suggests a political / fiscal bent to inflation that goes beyond interest rate theory. After all, no one (including the U. S. federal government) borrows for a fixed time frame over more than 30 years.<br /><br />That being said, the U. S. government does roll over it's existing debt which suggests that the Fisher equation is incomplete because it does not include either the rate of debt growth or the quantity of previously incurred debt.<br />Frank Restlyhttps://www.blogger.com/profile/09440916887619001941noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-53167873635870867602018-04-17T06:48:42.949-05:002018-04-17T06:48:42.949-05:00In this paper, we propose a procedure based on mix...In this paper, we propose a procedure based on mixed-frequency models and network analysis to help address both of these policy concerns. <br /><br />from:<br />https://www.scribd.com/document/369085349/wp2018-01#fullscreen&from_embed<br /><br />I am looking at FRB research and they use exactly the method that economic agents use, mainly adjusting the distribution by stepwise adjustment to the network, matched by trelative service intervals at the distribution nodes. From the agents point, the adjustment returns price uncertainty at the give market to return to a well known constant among agents.<br /><br />Thus, the economy determines how many eggs to a carton, economies of scale.Matt Younghttps://www.blogger.com/profile/08404998406161097199noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-14954004705377707392018-04-16T20:09:46.942-05:002018-04-16T20:09:46.942-05:00Careful,
You can go blind doing that :O)Careful,<br /><br />You can go blind doing that :O)Frank Restlyhttps://www.blogger.com/profile/09440916887619001941noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-54803229865045357562018-04-16T16:58:04.448-05:002018-04-16T16:58:04.448-05:00The Fischer equation should be:
Interest at t+1 =m...The Fischer equation should be:<br />Interest at t+1 =m Rt + It<br />R and inflation remain correlated, you can't fix the one without the other. The Fischer is really a Hamiltonian, potential and kinetic trade with each other. In the monetary sense we can see this when it takes three revisions to separate real from inflation in the past. Pricing adjustments is a multi-step process, and over the revision history the marks to market incorporate results from the previous revision. So the monetary shock in 1973 takes about ten steps over the next 50 years. We are just now finalizing the costs of the Reagan military build up, as just one of many examples.Matt Younghttps://www.blogger.com/profile/08404998406161097199noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-23735450171564961982018-04-16T07:05:05.874-05:002018-04-16T07:05:05.874-05:00Haha great. Here’s a good line from a bad movie: ...Haha great. Here’s a good line from a bad movie: “At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.”The Donkhttps://www.blogger.com/profile/14153840277624094270noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-43567606535791561402018-04-15T15:05:54.388-05:002018-04-15T15:05:54.388-05:00John,
"The new-Keynesian model is also Fishe...John,<br /><br />"The new-Keynesian model is also Fisherian -- interest rates decline here along with the inflation decline. There is no period of high interest rates lowering inflation. Again, we need more ingredients for that."<br /><br />What are those ingredients in the New Keynesian model?<br /><br />Also, it seems strange for New Keynesian to adopt a Taylor interest raise rule - central bank raises the nominal interest rate to "combat" a rising inflation rate when you just acknowledged that the New Keynesian model is Fisherian - ie, raising the nominal interest rate will increase the inflation rate.Frank Restlyhttps://www.blogger.com/profile/09440916887619001941noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-44897029274205080102018-04-15T10:36:29.318-05:002018-04-15T10:36:29.318-05:00I let this one through, as it hands down wins the ...I let this one through, as it hands down wins the prize for most incoherent comment ever posted to the blog, though in a somewhat humorous way. Is this a computer failing the Turing test? John H. Cochranehttps://www.blogger.com/profile/04842601651429471525noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-76997402404901121572018-04-14T18:43:15.146-05:002018-04-14T18:43:15.146-05:00Been a while since I passed calculus or constructe...Been a while since I passed calculus or constructed models (with Fortran cards).<br /><br /> But let me ask this: Is quantitative easing a way to actually back the currency and reduce the structural deficit as perceived by markets?<br /><br /> The experience with quantitative easing did not seem to lead to inflation in the US, Japan, or Europe. <br /><br />Of course, Switzerland engaged in a gigantic program of quantitative easing (about $90,000 per resident) and only manage to prevent further appreciation of its currency.Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-31901059229529365272018-04-13T22:06:02.835-05:002018-04-13T22:06:02.835-05:00This is cool. Will have to open it up and play wit...This is cool. Will have to open it up and play with it myself. Thanks for posting this.Mykel G. Larsonhttps://www.blogger.com/profile/17128735421035292909noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-82888089712498191752018-04-13T20:06:11.823-05:002018-04-13T20:06:11.823-05:00Change time a bit. Let depositors over sample and ...Change time a bit. Let depositors over sample and borrowes under, relative to each other. The banker performs term transformation, but has a fixed uncertainty as trades always cause sample rate adaption. We know the sample uncertainty is bound because the uniform sampler model above is optimum in an infinitely wealthy society. <br /><br />The uniform uncertainty requires the bank to congest the flow, keep matches between depositors and borrowers using large window sizes, enough to measure term length more accurately than the time uncertainty. This is fixed dimensional, the set of relative terms and rate co-adjusting. It is, simply, depositors and borrowers discovering the real 'time to completion' the inside value being priced. The system is orbital, as in semi-repeatable sequences about some random sequence..Matt Younghttps://www.blogger.com/profile/08404998406161097199noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-29591753587960788282018-04-13T19:29:40.100-05:002018-04-13T19:29:40.100-05:00The impulse response looks like ten year treasury ...The impulse response looks like ten year treasury yield the from 1976 until a 2016. In 1973 Nixon must have guessed the fiscal theory and tested it such that we could confirm it today, and do it again. It works, after all.Matt Younghttps://www.blogger.com/profile/08404998406161097199noreply@blogger.com