Monetary Policy

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Development and Finance

Wednesday, 20 November 2013
blog
Adam Smith said it best: in his magisterial work, the Wealth of Nations, he argued that governments have an essential role to play in enforcing contracts and promoting institutions to promote the quientessential Canadian virtues of "peace, order and good government."

A tale of two crises

Monday, 4 November 2013
blog
The debate that has raged over monetary and fiscal policy for the last several years has restored the issue of stabilization policy — once a standard element of graduate work, but increasingly pushed to the margins in recent decades — to the consciousness, if not the practice, of macroeconomics. It also has me thinking about the last time there was a similar crisis in macroeconomic policy. That earlier episode was the stagflationary 1970s; it too was a period of considerable uncertainty — Galbraith's Age of Uncertainty from which this blog's title is derived.

Off Balance: International Institutions and the Global Financial Crisis

Friday, 1 November 2013
video
In this lecture, CIGI Senior Fellow Paul Blustein discussed his latest book, Off Balance - a detailed account of the failings of international institutions in the global financial crisis that erupted in 2008.

Still missing after all these years

Wednesday, 30 October 2013
blog
A previous post discussed a new report on sovereign bankruptcy prepared by the Committee on International Policy and Reform and published by Brookings. The report discusses the potential role of debt thresholds, working in concert with the IMF at the global level, or the European Stability Mechanism at the European level, in creating incentives to limit the accumulation of debt, ex ante, and in facilitating timely, orderly restructuring, ex post.

Guidance in an Age of Uncertainty

Monday, 28 October 2013
blog
The Financial Times has an article, concerning Bank of England (BoE) Governor Mark Carney's policy of forward guidance. The article raises concerns that the policy could lead households and businesses to believe that current interest rate levels are "guaranteed." The danger, it suggests, is that the forward guidance policy increases the risk of distorting investment and sows the seeds of a future crisis (asset price bubbles).

Alan Greenspan: Technician or Engineer?

Tuesday, 22 October 2013
blog
In the past few days, opposing views of Alan Greenspan have emerged from two economists of some considerable renown. Writing in the Financial Times, here, Larry Summers reviews Greenspan’s new book. Summers’ review is balanced; in it, he notes his disappointment that “the events of the past few years had not led Greenspan to any revision of his anti-Keynesian views on macroeconomic policy.”

Award-winning author to detail ‘lamentable deficiencies’ of international financial institutions, in CIGI lecture

Monday, 21 October 2013
article
Award-winning author and journalist Paul Blustein will detail the “lamentable deficiencies” in the institutions tasked with addressing the challenges of the post-crisis global economy, when he delivers the next CIGI Signature Lecture

The European crisis in the context of historical trilemmas

Saturday, 19 October 2013
article
Harold James, Michael Bordo
The Eurozone’s tangle of conflicting goals – a series of ‘trilemmas’ – is not without precedent. This column argues that it is reminiscent of the interwar situation. The interwar slump was so intractable not just due to financial issues, but also a crisis of democracy, of social stability, and of the international political system. The big difference in the EZ is that nations cannot go off the euro as they went off the gold standard. That is why the initial EZ crisis may not have been so acute as some of the gold standard sudden stops, but the recovery or bounce back is painfully slow and protracted.

Lesson of the day

Friday, 18 October 2013
blog
Don't play the game of chicken on a bridge; especially when you are facing down a freight train fully loaded with iron ore. That is the conclusion to be drawn from the Congressional "time out" called in the game of brinkmanship over the U.S. debt ceiling.

Sovereign bankruptcy in the new age of uncertainty

Thursday, 17 October 2013
blog
The previous post, here, highlights the uncertainty induced by ongoing litigation over the restructuring of Argentine debt that occurred a decade ago. A ruling by the Second Circuit Court of New York could, in effect, recast the rules of the game by which successful sovereign debt restructurings have been conducted since the Argentine default.