Monetary Policy

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China's Long March Toward Economic Rebalancing

Tuesday, 1 April 2014
publication
After more than three decades of sustained economic growth, China has become the second-largest economy in the world. Chinese policies and behaviour have come to shape the global economy in profound ways and what China does, or does not do, at home and abroad often has broad implications for the rest of the world.

Secular stagnation, deflation risks, beggar-thy-neighbor policies

Thursday, 27 March 2014
blog
Ok, so, here is the problem worrying some: Behind the encouraging headlines of somewhat stronger growth in the advanced economies, Larry Summers worries that the North Atlantic economy is at risk of secular stagnation; meanwhile, the IMF frets that Europe is flirting with deflation, China is slowing, and the emerging markets are fearful of more “taper tantrums” as the Fed begins to slow the pace of quantitative easing.

CIGI report assesses the viability of the IMF’s creditor status, in light of lessons from the Euro crisis

Wednesday, 26 March 2014
article
A credible framework for maintaining discipline over International Monetary Fund (IMF) lending is required to ensure the viability of the organization’s preferred creditor status, according to a new CIGI report.

Unbalanced central bankers

Monday, 24 March 2014
blog
A key tenant of inflation-targeting central bankers (ITCBs) is symmetry. That is to say, policy responses that are symmetric with respect to deviations from their inflation target: inflation above the target elicits tightening; inflation below the target triggers monetary easing. All ITCBs profess fealty to the principle of symmetry. Yet, as the chart below illustrates, with the exceptions of Australia and the U.K., over the past two years inflation in most advanced economies has been persistently below target. Could this performance belie an asymmetry in what ITCBs say and do? Are their policy responses to deviations from the target unbalanced?

True citizens, honest guardians, proper markets and just laws

Tuesday, 18 March 2014
blog
Martin Wolf has a thoughtful piece in the Financial Times on the prerequisites for democracy. As readers of this blog will know, I have enormous respect for Wolf's work. His latest article was likely motivated by the brinkmanship being played out in Crimea: had there been a more stable democracy established in Ukraine, perhaps, the instability of recent weeks would not have provided President Putin with the pretext for his de facto annexation of the Crimean peninsula.

UK shakes up Bank of England with three new top policy appointments

Tuesday, 18 March 2014
article
David Milliken and William Schomberg
Director of CIGI's Global Economy Program Domenico Lombardi comments on the Bank of England's appointment of IMF official Nemat Shafik, as deputy governor for markets and banking.

Central Bank Independence in North Africa

Monday, 17 March 2014
publication
Securing central bank independence (CBI) has become best practice in global governance. Both the political and economic literatures suggest that CBI facilitates price stability, promotes transparency to citizens and provides accountability toward the public good. The impact of the Arab uprisings seems to have provided the necessary push for securing CBI in the North African region.

A Failure to Cooperate? Raising the Risks and Challenges of Exiting Unconventional Monetary Policies

Friday, 14 March 2014
publication
In an environment where trade and finance are globalized, it is imperative that stabilization policies do not harm the global economy. When the global financial crisis (GFC) erupted in 2008-2009, China was driving global economic growth and emerging markets helped soften the economic downturn. Now, these economies are slowing down, in part, as a consequence of the largest advanced economies seeking to exit unconventional monetary policies.

Big win for Renzi with $15bn tax-cut plan

Thursday, 13 March 2014
article
James Bone
'The challenge is not economic. It's political. Renzi is putting everything at stake in terms of his reputation as a reformist," says Director of CIGI's Global Economy Program Domenico Lombardi, commenting on the task facing Italy's Prime Minister Matteo Renzi.

Janeway outlines how trial and error (and error) drives the innovation economy

Tuesday, 11 March 2014
blog
“Economics has shifted, from celebrating the efficient, optimal allocation of resources through time, to recognizing that (it’s) really the study of the coordination of failures,” says author and venture capitalist William H. Janeway, during his CIGI Signature Lecture.