Blog: October 2017
I recently came across this video link to a session held at the 2017 ASSA meetings on the ‘Curse of the Top Five’. The session was organised by Jim Heckman and involves a panel discussion with participation by Heckman, George Akerlof, Angus Deaton, Drew Fudenberg and Lars Hansen. I’m going to concentrate here on the presentations by Heckman and Akerlof.
The events in the financial markets of 2007 and 2008 represented a huge economic and financial shock and the correct response was to run public deficits and to loosen monetary policy rapidly and for an extended period to facilitate as orderly an adjustment to these shocks as possible. These initial responses were intended to be temporary, as indeed are all monetary interventions. But ten years after these events, we are still running fiscal deficits and monetary policy seems ultra-accommodative.
On Thursday, 26 October, market participants expect the European Central Bank to set out its plans for the future of its asset purchase programme. After its last Governing Council meeting, President Draghi said that the ‘bulk of decisions’ concerning quantitative easing is likely to be taken in October. What many observers wonder is: will lifting unconventional monetary policy measures lead to a renewed divergence of euro area government bond yields?
Cloud Yip is running a series of interviews under the title of “Where is the General Theory of the 21st Century” and I was privileged to be included in that series. Last week I put up my first post about the interview. This week’s post is the second in a series where I expand on my answers to Cloud. Here, I discuss my views on rational expectations and I talk about a new version of search theory, Keynesian Search Theory, that underpins my joint papers with Giovanni Nicolò on “Keynesian Economics without the Phillips Curve” and with Konstantin Platonov, “Animal Spirits in a Monetary Model”.
A couple of months ago, I had the pleasure of speaking with Cloud Yip. Cloud is running a series of interviews under the title of “Where is the General Theory of the 21st Century” and I was privileged to be included in that series.
Recently, the FT showed that contrary to popular belief the most troubling issue for SMEs in Europe is not access to finance but access to skills – with the level of concern and the gap between the issues getting larger.
Today’s announcement of a Nobel Prize for Richard Thaler is richly deserved and I congratulate the Nobel committee for recognising the importance of the growing influence of behavioural economics that Richard helped to create.
Policy makers at central banks have been puzzled by the fact that inflation is weak even though the unemployment rate is low and the economy is operating at or close to capacity.