Monday , December 6 2021
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Tag Archives: Uncategorized

Paper: Financial regulation, demand for ‘safe assets’, and monetary conditions

I have a new paper out at Center for Corporate Governance at Copenhagen Business School. Here is the abstract: In the aftermath of the economic and financial shock of 2008-10, the wider policy debate has often turned on why inflation has remained very subdued and interest rates and bond yields historically low despite a marked drop in interest rates and a significant increase in the money base in the US and the euro zone. In this paper, we try to explain these developments with...

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Indebted societies: How private borrowing has become a substitute for social policy in rich democracies

When citizens encounter financial difficulties, they often turn to private borrowing on credit markets. As Andreas Wiedemann explains, this form of borrowing now increasingly acts as a support mechanism that complements the welfare state in rich democracies. But while credit markets and welfare states appear to fulfil similar functions, they follow different underlying logics, each with their own socio-economic and political consequences that shape and amplify insecurities,...

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10 years of Market Monetarist thinking

On this day ten years ago I published a Working Paper on Marcus Nunes’ blog “The Faint of Heart” with the title “Market Monetarism – The Second Monetarist Counter-revolution”. This is the Working Paper in which I coined the term “Market Monetarism”. Little did I know that over the following decade monetary scholars as well as central bankers would refer to market monetarism as a school of thought and little did I know that market monetarism would have such an impact on monetary policy...

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The European Central Bank’s revised monetary policy strategy

The European Central Bank announced a new monetary policy strategy in July. Iain Begg writes that while the revised strategy has so far received a muted response, there are likely to be major battles ahead over its implementation. After extensive consultation, delays caused by the pandemic and hard-fought battles in its Governing Council, the European Central Bank has a new monetary policy strategy, summarised in a July 2021 statement. What should we make of it? Eighteen years elapsed...

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The Fed’s Average Inflation Target (AIT) will soon tell the Fed to aim for DEFLATION

Back in April I warned that given the massive expansion of the US broad money supply we could very well be heading from double-digit inflation in the US later in 2021 or 2022. At that time inflation was at 1.6% (March). Today we got inflation for June – and now inflation is at 5.4% and core inflation is at the highest level in 30 years. So far my inflation simulation seems to be pretty much on track. But that is not the topic for this blog post – at least not the main...

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Steve Horwitz, Mensch, economist and classical liberal scholar. A last farewell.

One of my great intellectual heroes is no more. Economist and classical liberal scholar Steve Horwitz has died. Steve lost the fight to cancer. Far too young. Steve and I was in contact over the years and he was always an extremely kind person and even when we disagreed (which wasn’t often) he always remained a gentleman scholar. A real Mensch. Steve Horwitz was a great economist and particularly is writing on monetary disequilibrium inspired me a great deal. He was an...

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What to expect from the 2021 French regional elections

France will hold regional elections on 20 and 27 June. Françoise Boucek explains why the vote matters and what the outcome might tell us about the 2022 French presidential election. This month’s regional elections in France are a tough call. A volatile environment is marked by a complex two-round non-majoritarian list system and a de-aligned and fragmented party system with factionalised parties on the left and right. Historically, these regional contests were a fair predictor of...

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Small towns and cities must be given a greater voice in efforts to increase urban inclusion

A number of EU initiatives have been implemented to help make Europe’s urban areas more inclusive spaces for the people who live in them. Yet as Claudio Tocchi, Luciano Scagliotti and Licia Cianetti explain, the bulk of attention has so far focused on large cities. They argue that if the EU is serious about improving inclusion, it must better integrate the voices of small and midsize towns and cities. The growing political, economic, and social distance between metropolitan areas and...

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Heading for double-digit US inflation

I have spend a lot of my time since 2008 arguing that US monetary policy was much less expansionary than most people thought and has been arguing for a more aggressive response from the Federal Reserve to combat deflationary pressures. Furthermore, I have last year welcomed the Fed’s policy respond to the lockdown crisis – see for example here – as I feared a repeat of the deflationary shock of 2008-9. Furthermore, even though I have been somewhat worried about the sharp pick up...

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