Comments on Exiting the Era of Big Balance Sheets

Balance sheets of central banks in advanced economies have ballooned by trillions of dollars since the onset of the Great Recession.  Now, U.S. policymakers are beginning to focus on the goal of unwinding the balance sheet.  While the arguments for doing so are not convincing, it seems inevitable at this point.  That said, there are several things that seem to missing from policymakers’ discussions this far of the unwind of which they must be very cognizant. Continue reading Comments on Exiting the Era of Big Balance Sheets


Presentation: The Safe Asset Shortage

3 days of the “Europe in Crisis” conference in Madison, WI have come to a close.  A fantastic conference with even better speakers—ranging from Gillian Tett of the Financial Times to Chad Bown of the Peterson Institute, and everyone in between.  Great insights on Brexit, the euro crisis, populism, and more.  I presented on Europe’s safe asset shortage and the mechanisms by which it is hindering the economic recovery. (Slides below.) Thanks to all the attendees, speakers, and conference organizers (European Horizons) for the great conference.

Yes, The World Does Have a Shortage of Safe Assets…And Central Banks Aren’t Helping

My latest over at The Huffington Post. A wonkish look at the safe asset shortage and the waning efficacy of quantitative easing:

Central Banks Should Focus Stimulus Efforts on Equities

Weak economic activity, central bank balance sheet risks, and misaligned investor incentives can be alleviated.  My latest at the Huffington Post:

“All Models Are Wrong, But Some Are Useful”: Safe Asset Shortage Edition

“The national debt as a share of gross domestic product has more than doubled since 2007, to around 75%, but net interest payments on the debt have actually declined,” Continue reading “All Models Are Wrong, But Some Are Useful”: Safe Asset Shortage Edition

Governments Can’t Keep Up with Their Own Post-Crisis Regulations

Advanced economy governments have increased financial regulation in the aftermath of the crisis, but haven’t altered their own behavior sufficiently to compensate for greater restrictions—-My latest over at The Huffington Post:

Josh Hendrickson: “The Importance of Safe Assets”

Here is a good primer from Josh Hendrickson of the University of Mississippi on the mechanics of the global safe asset shortage—a recurring topic in my articles/posts.

The Everyday Economist

A theme you often hear among bloggers, but a bit less so in seminars, is the idea that the supply of and demand for safe assets matter. David Beckworth is one such blogger who talks about this, but critics often find it hard to think about the macroeconomy in these terms since the role of money has been marginalized within the New Keynesian wing of macroeconomics. I say this because David’s intuitive explanation of safe asset equilibrium seems to be a cross between New Keynesian intuition and Old Monetarist intuition. He is trying to communicate his message to what is essentially the mainstream of the discipline, but by emphasizing something that isn’t generally in their models.

Along these lines, I was happy to stumble upon this paper by Caballero, Farhi, and Gourinchas. In my view this paper is quite similar to David’s views regarding safe assets and monetary policy and…

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