Taylor rules were made to be broken

July 27, 2011

When calibrating monetary policy, central bank officials often turn to the Taylor rule, a useful construct for thinking about the relationship between unemployment and inflation pioneered by John Taylor, former Treasury official and Stanford economics professor. So as the U.S. economy appears to falter and investors begin to speculate on the prospect of another round of monetary stimulus from the Federal Reserve, it’s worth checking in with Taylor’s model.

from The Great Debate:

A great divide holds back the relevance of economists

By Mark Thoma
July 26, 2011

By Mark Thoma
The opinions expressed are his own.

Reuters invited leading economists to reply to Mark Thoma’s Op-Ed on the “great divide” in economics and will be publishing the responses. Here are responses from Ashwin ParameswaranJames HamiltonDean Baker, Lawrence Summers, and a recap of Paul Krugman’s.

A very British excuse

July 26, 2011

This time it was the royal wedding. When the economy shrank unexpectedly late last year, it was the bad weather. If Britain’s economy again struggles to generate growth in the current quarter, perhaps it will be blamed on the new series of ‘The Apprentice’.

Fed’s Plosser on default risk, inflation, and more

July 21, 2011

The following are highlights from a Reuters interview with Philadelphia Federal Reserve Bank President Charles Plosser on Wednesday.

Debt ceiling scuffle already hurting economy

July 20, 2011

When U.S. President Barack Obama warns about the possible damage to economic growth from a failure to lift the debt ceiling, he usually speaks about it in the future tense. So does Federal Reserve Chairman Ben Bernanke who, when asked about the issue in congressional testimony last week, said “it certainly could slow the economy.”

Give me liberty and give me cash!

June 22, 2011

Come back Mr Fukuyama, all is forgiven.

In his 1992 book “The End of History and the Last Man”, American political scientist Francis Fukuyama famously argued that all states were moving inexorably towards liberal democracy. His thesis that democracy is the pinnacle of political evolution has since been challenged by the violent eruption of radical Islam as well as the economic success of authoritarian countries such as China and Russia.

The iPod – the iCon of Chinese capitalism

June 7, 2011

Walking past Apple’s sleek shop along London’s Regent Street on Sunday, my wife asked me what I wanted for Father’s Day.

The wavering faith of capitalism’s high priests

November 18, 2010

Yet another guardian of market orthodoxy has uttered what was once an unspeakable heresy.

What emerging animal are you?

November 15, 2010

Ever since Goldman Sach’s Jim O’Neill came up with the idea of BRICs as an investment universe, competitors have been indulging in a global game of acronyms. Why not add Korea to Brazil, Russia, India and China and get a proper BRICK? Or include South Africa, as it wants, to properly upper case the “s” – BRICS or BRICKS?

The IMF to turn on the rich

October 11, 2010

The latest International Monetary Fund meeting ended with emerging market powers getting a pledge from the organisation for stronger and “more even-handed” scrutiny of what is going on in large advanced economies.