Why the Fed’s Zero Interest Rate Policy Failed

30 agosto 2016Dan Thornton

If you are like many Americans and an increasing number of economic and financial analysts, you have come, or are coming, to the conclusion that the Federal Open Market Committee’s (FOMC’s) zero interest rate policy has failed: Economic growth has been anemic relative to previous economic expansions. And the decline in the unemployment rate from its recession peak of 10 percent to 4.9 percent (which the FOMC attributes to its policy) was in large part accomplished by an unprecedented decline in the labor force participation rate, not by a massive increase in employment (payroll employment didn’t eclipse its January 2008 peak until April 2014). But you might not be quite sure why the zero interest rate policy has failed. This essay discusses not only why the policy failed, but why some economists, myself included, expected it to fail.


Beer Economics at NYU: Go West … towards greener pastures and the job market

24 febbraio 2016alberto bisin

A few times a year NYU econ graduate students organize a "beer and economics" meeting where they eat (pizza) drink (beer) and listen to a faculty member they invite. A few days ago it was my turn, for the second time (I had written up the first one as well and posted it here). Here's how it went.


Why are interest rates so low (III)*

17 aprile 2015michele boldrin e Carlos Garriga

Some days ago Bernanke published the third piece in the series, where he begins to outline his explanation of why interest rates are so low. Not surprisingly, his first suspect turns out to be "Global Savings Glut", an argument he has been pushing for at least a decade. Nothing new under the sun and nothing really convincing. 


Why are interest rates so low (II)

2 aprile 2015michele boldrin

I take up the second part of Ben Bernanke's analysis of why interest rates are so low. He rejects the "secular stagnation" hypothesis advanced, among other, by Larry Summers (see here for more contributions and here for Summers' counterpoint to Bernanke's post). Like Bernanke I do not find the secular stagnation hypothesis convincing at all. But I also find his analysis far from satisfactory, even incoherent sometimes. I do not see why "facts" that are not facts are being accepted as the starting point of analysis, and why the latter has to turn immediately into questions of policy framed in the most narrow format. If we are not even sure of what is going on, what is the point of debating policies?


Why are interest rates so low (I)

31 marzo 2015michele boldrin

I have been thinking at the question in the title for a while, unable to find a convicing answer. Today I discovered that Ben Bernanke believes has an answer, which serves, if I do not read it wrong, as the opening post of his new blog. Needless to say it does not convince me, if anything because his was one of the many hypotheses I also considered and then disregarded. But BB is BB, hence, lacking a better theory and remembering Bob's wise dictum - it takes a model to beat a model - let me use BB's model to try putting order in my own thoughts.


The Keynesian Illusion

25 marzo 2015David K. Levine

Why does old-fashioned Keynesianism, despite its empirical and intellectual failure, continue to grip the imagination of so many intelligent people?

Traduzione italiana (senza appendice).


Jean Tirole and "MIT Theory"

3 novembre 2014Lones Smith

Retrospective insights on Jean Tirole as the exemplar of "MIT Theory"


Remembering Stan Reiter

27 settembre 2014michael suk-young chwe

My teacher Stan Reiter passed away back in August. Stan was one of the most important figures in the development of mathematical economic theory in the 20th century but I remember him most for his grace and kindness.


Un giorno triste triste triste

6 maggio 2014alberto bisin e giorgio topa

Ieri è mancato Gary Becker. Gli dobbiamo moltissimo, intellettualmente, professionalmente e personalmente. Gli vogliamo molto bene. Il ricordo che segue è molto personale, frammentato, e incoerente - con la speranza che il tutto sia superiore alle parti e ne esca un suo ritratto ragionevolmente somigliante. Lo scriviamo a lui e per lui - non vogliamo scrivere alle sue spalle - e quindi non possiamo che farlo in inglese.

Gary Becker passed away yesterday. We owe him a great deal, intellectually, professionally, and personally. We love him dearly. The following memories are very personal, fragmented, and incoherent - but hopefully the sum will turn out greater than its parts and a reasonably close portrait of his will come out. We are writing this to him, for him - certainly not behind his back - and hence it can't be other than in English.

We wrote separately and independently (sorry for any repetitions) - we felt we needed to. 


Beer and Economics at NYU: On the Ivory Tower

14 aprile 2014alberto bisin

A few times a year NYU econ graduate students organize a "beer and economics" meeting where they eat (pizza) drink (beer) and listen to a faculty member they invite. A few days ago it was my turn. Not an easy endeavor, following on the footsteps of Tom Sargent and David Pearce. So I had to prepare - and here's the outcome. (Be lenient in your judgment; stand-up's not my forte). Here's how it went.