Macro Musings Podcast: Josh Zumbrum

My latest Macro Musing podcast is with Josh Zumbrum. Josh is a national economics correspondent for the Wall Street Journal. He joined me to talk about the angst facing the economics profession in this current environment. We also talked about the future of economic journalism, economic facts, and what really drives inflation.

It was fascinating conversation throughout. You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more episodes are coming.

Related Links
Josh Zumbrum's web page at the Wall Street Journal
Josh Zumbrum's twitter account

Macro Musings Podcast: James Bullard

 

My latest Macro Musings podcast is with James Bullard. James is the President of the St. Louis Federal Reserve Bank and an accomplished economic scholar. He joined me for a great conversation on macroeconomics that covered everything from the determinants of inflation to the Fed's balance to the future path of monetary policy. We also discussed Jame's work on imperfect credit markets and how it provides a another justification for NGDP level targeting. 

This was a fascinating conversation throughout and the transcripts for the show are here. You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more episodes are coming.

Related Links

James Bullard's page at the St. Louis Federal Reserve

Macro Musings Podcast: Tyler Cowen

My latest Macro Musings podcast is with Tyler Cowen. Tyler is a professor of economics at George Mason University. He joined me to discuss his new book, The Complacent Class: The Self-Defeating Quest for the American Dream. In it, Tyler argues that the restlessness and willingness to take risks have been key traits throughout American history has been waning. In the last few decades, American society has become more risk-averse and this has led to less innovation and dynamism in the economy. 

Tyler notes that this risk aversion has bled over into macroeconomic policy and may be a contributor to the slow recovery following the 2008 crisis.

This was a fun and fascinating conversation throughout. You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more episodes are coming.

Macro Musings Podcasts: Jeffrey Frankel

My latest Macro Musings podcast is with Jeffrey Frankel. Jeff is a professor and economist at Harvard University and directs the program on international finance and macroeconomics at the National Bureau of Economic Research.

Jeff joined me to talk about the future of globalization, the dollar, the Plaza Accord, and more. It was a fascinating conversation throughout. 

You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more episodes are coming.

Macro Musings Podcast: Jason Furman

My latest Macro Musings podcast is with Jason Furman. Jason is currently a Senior Fellow at the Peterson Institute for International Economics. Previously, Jason spent eight years serving on President Obama’s Council of Economic Advisers, including the chair position from 2013-2017. Jason also worked on the Council of Economic Advisers under President Clinton.

Jason joined me to talk about his time at the CEA. Among other things, we talk about fiscal policy, the fiscal multiplier, monetary policy offset, and the platinum coin. This was a super fun talk throughout. 

You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more episodes are coming.

Related Links

Jason Furman's Twitter Account

Jason Furman's Webpage

Macro Musings Podcast: Larry White

My latest Macro Musings podcast is with Larry White. Larry is a professor of economics at George Mason University where he specializes in monetary economics and monetary history.

Larry joined me to talk about India's demonetization's efforts and Austrian macroeconomics. This was fun and fascinating conversation throughout.You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more episodes are coming.

Related Links

Larry White's Homepage

Macro Musings Podcast: Tim Duy

My latest Macro Musing podcast is with Tim Duy. Tim is a professor of economics at the University of Oregon, a columnist for Bloomberg, and a former economist at the U.S. Department of Treasury. 

Tim is also a widely read Fed-watcher and he joined me to talk about Fed watching and the future of U.S. monetary policy. If you want to get into Fed watching this podcast is just for you. Tim shares his approach and what defines a successful Fed watcher. 

We also discussed some of Tim's recent comments about the normalization of Fed monetary policy. The FOMC plans to return to normal monetary policy by first raising it interest rate target and then by reducing the size of its balance sheet. Tim thinks this is a bad idea, as he has written in several Bloomberg articles. He would like to see a simultaneous raising of interest rates and shrinking of the Fed balance sheet as the Fed returns to normalcy. We discuss why he favors this approach.

This was a fascinating conversation throughout. You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more episodes are coming.

Related Links

Tim Duy Homepage

Tim Duy Twitter Account

Tim Duy Bloomberg Articles

Macro Musings Podcast: Hester Peirce

My latest Macro Musings podcast is with Hester Peirce. Hestor is a Senior Research Fellow and director of the Financial Markets Working Group at the Mercatus Center. She previously served on Senator Richard Shelby’s staff on the Senate Committee on Banking, Housing, and Urban Affairs. In that position, she worked on financial regulatory reform following the financial crisis of 2008 as well as oversight of the regulatory implementation of the Dodd-Frank Act. Hester also served at the Securities and Exchange Commission as a staff attorney and as counsel to Commissioner Paul S. Atkins.  Hester was also nominated by President Obama to be an SEC Commisioner.

Hester joined me to discuss a new book she co-edited with Ben Klutsey titled “Reframing Financial Regulation: Enhancing Stability and Protecting Consumers” This book covers a lot of topics on how to better regulate the financial system. 

We spent most of our time talking about how to improve the stability of the financial system. The laws and regulations emanating from Dodd-Frank (DF) were supposed to make the financial system safer, but a number of recent papers--Nissim and Calormiris (2014), Sarin and Summers (2016), Chousaks and Gorton (2017)--find the banking system weaker now and not meaningfully safer than pre-2008. Others, like Minneapolis Fed President Neel Kashkari, are worried about financial institution that remain too big to fail (TBTF) since they still fund with too much debt. Moreover, it is not clear if the reforms made in DF, like living wills and the Financial Stability Oversight Council, will actually make much difference should the TBTF institutions get in trouble again. President Kashkari, consequently, has proposed a number of reforms to end TBTF.

Hester and I discussed these concerns as well as the possibility that DF has actually increased the fragility of the financial system. One area, in particular, that is creating new potential problems for financial stability is the new DF central clearinghouse utility for derivatives. These central clearinghouses or CCPs were created as a way to improve transparency about derivatives so that regulators and other observer would know what is happening in this part of the financial system. Ironically, however, they appear to be making the financial system more fragile. This is because the CCPs concentrate all the risk from formerly bilateral relationships into one financial firm, making it another TBTF institution. Put differently, DF has inadvertently created more Lehmans or AIGs. 

Now some of the clearinghouse existed before DF, but they have grown and absorbed more risk since DF. In fact, the Financial Stability Oversight Board has designated some of the CCPs as TBTF institutions that need to be monitored. Other reports have come out saying "clearing house push has created unforeseen systemic risk" or "U.S. Treasury warns clearinghouses could spread risk". So it is not clear whether DF on balance has increased the safety of the financial system.

Hester and I do discuss other issues that are covered in the book, but I wanted to highlight here what I see as one of the bigger issues still facing us eight years after the crisis.

If you are interested in the book, you can download it or individual chapters from here. This is a great resource to have as the new President and Congress consider revamping financial regulation.

This was a fascinating conversation throughout. You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more episodes are coming.

Related Links

Small Banks by the Numbers

Macro Musings podcast with Anat Admati (similar these covered).

Macro Musings Podcast: JP Koning

My latest Macro Musings Podcast is with JP Koning. JP is an economist who works in the Canadian financial industry and is a walking encyclopedia on the institutional details of central banks and money. He runs a fantastic blog called Moneyness--a must read for anyone serious about understanding money and its history. JP joined me to talk about some of the more interesting institutional arrangements for central banks and money today.

We began our conversation by talking about central banks of Switzerland, Japan, South Africa, Belgium, and Greece. They are unique in that they have stocks that are traded on the stock market. As JP notes, however, these stocks function more like a perpetual bond than an actual stock.

Another fascinating central bank story is that the Bank of England in that it used to allow personal checking. It no longer does this, but it demonstrates that the current restrictions on access to central bank balance sheets has not always been in place. And there are many advocates who would like to see a further openness of central bank balance sheets as a way to stem financial crisis. We discuss the implications of going down this path.

What happens when a central bank has internal divisions and various branches compete against each other? This happened recently in Libya and JP gives us the details. Our conversation then turned to the dollarization of the Zimbabwe economy following its bout of hyperinflation in 2008. We discuss how it happened and the influence U.S. monetary policy has on dollarized economies. We also discuss what appears to new monetary mischief being done by the government of Zimbabwe.

We also briefly touch on the latest case of hyperinflation in Venezuela. The Wall Street Journal had an interesting piece on a man who is considered by the number one nemesis of the Venezuela government for publishing black-market exchange rate of the Bolivar currency.

Our talk ends with a discussion on the Fedwire and the potential for a Fedcoin.

This was a fascinating conversation throughout. You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more shows are coming.

P.S. Here is a slide show on the evolution of Zimbabwe's currency leading up to the hyperinflation in 2008.

Macro Musings Podcast: Mark Calabria

My latest Macro Musings podcast is with Mark Calabria of the Cato Institute. We discussed his time doing financial regulation and Fed policy as a senior staffer on the U.S. Senate Committee on Banking, Housing, and Urban Affairs. We also spent some time discussing his new paper on applying behavioral economics to Fed policy.

This was a fascinating conversation throughout. You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more shows are coming.

Related Links

Mark Calabria's Home Page

Mark Calabria's Twitter Account

Mark Calabria's New Paper

Macro Musings Podcast: Roger Farmer

My latest Macro Musings podcast is with Roger Farmer. Roger is a Professor of Economics at UCLA. He joined me to discuss his latest book, Prosperity for All: How to Prevent Financial Crises. 

This was a very fascinating conversation. Roger makes the case that modern macroeconomics as it is formally practiced has gone down the wrong path with the New Keynesian paradigm. He considers it a degenerative research agenda for several reasons. First, it is premised on the natural rate hypothesis (NRH) which he sees as incorrect. He uses the analogy of a child hitting a rocking horse to describe the NRH. The child hitting the horse will cause it to rock, but eventually it will come to rest. Likewise an economy buffeted by shocks will cause fluctuations but eventually the economy will return to its full employment level. Roger sees this view as fundamentally wrong

Roger contends a more accurate analogy would be a rudderless boat blown by various winds to new locations and staying there until new winds come along. Put differently, Roger believes in multiple equilibria for the economy that arise because of various shocks--the winds--pushing the economy to new points. The economy may stay at these equilibria for some time. Some equilibria may be good, some bad. One of the important shocks that determine these equilibria are peoples beliefs or confidence. In his work he has formally modeled this through a 'belief function' that replaces the Philips Curve in the standard New Keynesian model. This was a key theme running throughout our conversation.

Other problems Roger sees with the New Keynesian paradigm include prices being implausibly sticky, the absence of involuntary unemployment, small welfare costs to business cycles, and the inability to explain bubbles and crashes. His modeling approach aims to fix these problems and bring back the original animal spirit theme of Keynes in a formal rational expectations framework. 

Moving beyond modeling issues, Roger also believes the reason for economic volatility is not sticky prices but incomplete markets. Specifically, incomplete labor and financial markets. This was interesting because it implies price signals are not working properly and preventing markets from doing their magic. His solution is to have the government stabilize the growth of a stock market index via purchases of ETFs.

This was a fun conversation throughout. And his book is highly recommend. It really gets into the philosophy of science and its implications for the macroeconomic discipline. 

You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can 

also listen via the embedded player above. And remember to subscribe since more shows are coming.

Related Links

Roger Farmer's Home Page

Roger Farmer's Books

Macro Musings Podcast: Rudi Bachmann

My latest podcast is with Rudiger Bachmann. Rudi is an associate professor of economics at the University of Notre Dame and a research affiliate at the Center for Economic Policy Research. Rudi has published widely on macroeconomic issues in top journals and is an active member of the German Economic Association. He also blogs and write popular press articles for the German media. Rudi joined me on the show to discuss German macroeconomics as well as some of his own research. 

Our conversation begins by noting that German macroeconomics appears to be very different than Anglo-American macroeconomics. Rudi notes that is partly a misperception problem, but there is indeed something different. What is different is how macroeconomics is currently practiced in Germany: it reflects the ordoliberalism view that stresses a rules-based approach to policy. This approach to macroeconomics makes lawyers rather than economists top advisers to policy in Germany and it reflects the lasting legacy of Walter Eucken. This view not only affects Germany, but macroeconomic policy throughout the EU. 

One of the interesting issues that emerge from this discussion is that the German polity seems to worry more about repeating the mistakes of the Weimar hyperinflation in the early 1920s than the mistakes of the Great Depression in the late-1920s. The former is well known but the latter was arguably more consequential since it helped bring the Nazi to power in Germany. It is not clear why the hyperinflation experience trumps the Great Depression experience, but its experience helps shape the ordoliberalism approach to economic policy in Europe today. 

Rudi and I then shift our conversation to the future of Europe. Rudi remains hopeful that EU project will survive the Eurozone crisis and other challenges now facing it.

We conclude by discussing Rudi's work on uncertainty and the business cycle and the importance of inflation expectations for consumers. 

This was a fascinating conversation throughout. 

You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more shows are coming.

Related Links

Ruid Bachmann's homepage

Macro Musings Podcast: Narayana Kocherlakota

My latest Macro Musings podcast is with Narayana Kocherlakota. Narayana is a professor of economics at the University of Rochester. He has published widely in economics, including in the areas of money and the payment system, business cycles, financial economics, public finance, and dynamic contracts. He also writes regularly for Bloomberg View. 

Formerly, Narayana was the president of the Minneapolis Federal Reserve bank, where he served between 2009 and 2015.  He joined me to talk about his time at the Fed and his current views on Fed policy.

This was a fascinating conversation throughout and a must-listen episode for all Fed watchers. The first part of our conversation covered what it was like being a regional Fed president. This included, among other things, how he stayed informed, how he managed the Minneapolis Fed, and how he prepared for FOMC meetings.

We then moved onto the the FOMC and the dynamics of the meeting itself. The preparation, the room, the seating, the order of business, and the rules of engagement are all important part of the FOMC decision-making process, but also are little known to outsiders. Narayana fills us in on the details as we discuss these and other issues--including whether FOMC members are more guarded in what they say because transcripts will be released--surrounding the FOMC meeting. 

Our conversation next turned to the actual conduct of monetary policy since the crisis. What role did the Fed policy play in the recovery? Could it have done more? If so, was a more aggressive monetary policy even possible? Also, to what extent did public pressure play on shaping Fed policy versus the internal thinking of FOMC members themselves.

Finally, we discuss ways to improve Fed policy and whether the supply side of the economy is endogenous, in  part, to demand pressures. This was a great conversation. 

You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more shows are coming.

Related Links:
Narayana Kocherlakota's home page
Narayana Kocherlakota's twitter account
Narayana Kocherlakota's Bloomberg articles

Macro Musings Podcast: Izabella Kaminska

My latest Macro Musings podcast is with Izabella Kaminska. Izabella is part of Financial Times Alphaville, where she has been since 2008. She has written extensively on monetary policy, fiscal policy, financial technology, and is key force behind the Financial Times Festival of Finance. As a longtime follower of her work, it was a real treat to have her on the show.

We started our conversation by talking about blockchain technology and its implications for the payment system. Izabella is not optimistic about blockchain's future and wonders whether it will fulfill the expectations and hopes many observers have set out for it. 

Next, we move on to the topic of universal banking. This is the idea that a central bank would open its balance sheet to anyone, including households and non-financial businesses. Doing so would solve the bank run problem and reduce the probability of a financial crisis. There are already movements in that direction with introduction of the Fed's overnight reverse repo program (RRP)  and derivative houses opening accounts with the Chicago Fed. In the limit, universal banking would mean individuals could have personal checking accounts at the Fed. While this might solve the bank run problem, it would also mean a much larger government role in financial intermedation. We discuss why this would probably end very badly.

Izabella then discusses her take on unconventional monetary policy, especially the use negative interest rates. She is very critical of negative interest rates and explains why. Our conversation then segues into what can be done by policymakers during a deep recession. 

We conclude by taking a look at the book Trekonomics, by Manu Saadia, and consider its implications for future of economic growth. We also spend some time comparing the economics of Star Trek to Star Wars.The conversation was fascinating throughout.

You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more shows are coming.

Macro Musings Podcast: Claudio Borio

My latest Macro Musings podcast is with Claudio Borio. Claudio is the director of the Monetary and Economic Department at the Bank for International Settlements (BIS) and has been at the BIS in various roles since 1987. Previously, he was an economist with the OECD. Claudio is the author of numerous publications in the fields of monetary policy, banking, finance and issues related to financial stability. He is a leading voice on macroprudential regulation as well on international monetary stability issues. Claudio joined me to talk about these and other issues.

We began our conversation by considering what it is like to work at the BIS, the banks for central banks. We then segue to a discussion on the period leading up to the Great  Recession, a time when the BIS was one of the few institutions warning about the credit and housing boom. How did they get it right when so many central banks got it wrong? One answer is the BIS perspective on macroeconomics goes beyond the standard took kit of interest rates, inflation, and output gaps. The BIS, for example, does not see price stability as a sufficient condition for financial stability, it looks at gross capital flows rather than net, and it closely follows excessive credit growth. This thinking was largely absent from central banks prior to 2008.

Our conversation next moved to the international monetary system, the outsized role the dollar and the Fed plays in it, the Triffin dilemma, and what can be done to make the global financial system more robust. 

Claudio gave an interesting talk late last year title Revisting the Three Pillars of Monetary Policy. The three pillars are the importance of the equilibrium interest rate, the long-run neutrality of monetary policy, and the need to avoid deflation in all circumstances.We discuss why a more nuanced understanding of these ideas is needed and how it may have produced better macroeconomic policy before the crisis. For example, Claudio notes that this understanding would have made it easier to avoid the 'debt trap' that much of the global economy seems to be stuck in at the present. It also would have made central banks less fearful of benign deflationary pressures--those created by positive supply shocks--and thus avoided unnecessarily easy monetary policy during the housing boom period.

We then consider Claudio's coauthored article that reviews the vast amount of research that has been done on estimating the effect of the various unconventional monetary policies tried since the Great Recession. Claudio's survey of the literature finds that these policies have influenced yields and asset prices, but their effect on the real economy is more uncertain.

Finally, we close by asking Claudio what advice he would give to a young, budding macroeconomist. It was a fascinating conversation throughout. 

You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more shows are coming. 

Related Links
Claudio Borio's web page at the BIS
Global Imbalances and the Financial Crisis: Link or No Link? (2011) Claudio Borio and Piti Disyatat
Unconventional Monetary Policies: A Reappraisal (2016) - Claudio Borio
The Cost of Deflation: A Historical Perspective - Claudio Borio, Magdalena Erdem, Andrew Filardo and Boris Hofmann.
Revisting the Three Pillars of Monetary Policy - Claudio Borio
The Great Liquidity Boom and the Monetary Superpower Hypothesis--David Beckworth and Chris Crowe

Macro Musings Podcat: Andy Levin

 

My latest Macro Musing podcast is with Andrew Levin. Andy is a professor of economics at Dartmouth College and previously served two decades as an economist at the Federal Reserve Board, including two years as a special adviser to Chairman Ben Bernanke and Vice Chair Janet Yellen. Andy, in short, has a deep understanding of the history and workings of the Board of Governors and the FOMC .

During his time as a special adviser he helped spearhead the advent of the FOMC press conference, the Summary of Economic Projections, and the now infamous dot plot graph. He also was involved with the FOMC's official adoption of its 2 percent inflation target. Andy discusses these developments with me and how he would like to see them further refined. 

We also discussed what happened in 2008. The economy was contracting and yet for much of the year the Fed was signalling it was worried about inflation and wanted to raise rates. Specifically, beginning around April 2008 the market expectation of where the federal funds rate would be 12 months ahead started rising. It rose all the way to about 3.5 percent by June 2008--the market was expecting the Fed to raise rates 150 basis points in mid-2008! Although it slowly came down, the fed fund futures rate 12-months ahead still remained higher than the actual federal funds rate through September. This can be seen in the figure below:

Andy notes that the FOMC transcripts reveal that even by the September 2008 meeting Fed officials were still not grasping the severity of the crisis. Why? We discuss whether they were simply too focused on inflation or whether insular thinking and group think prevented the Fed from appreciating the severity of the downturn during 2008.   

We then moved on to Andy's proposed reforms. These have received coverage in the media and support from the 'Fed Up' campaign. Andy's reforms are driven by four key problems he finds with the Fed: (1) Regional Fed banks face a conflict of interest given their private ownership, (2) the process for choosing Fed officials is opaque and broken, (3) their is a lack of diversity at the Fed, (4) the Fed is shielded from public oversight. Andy's solutions to these problems are to (1) end commercial ownership of the regional Fed banks, (2) make Fed officials limited to a single, non-renewable 7-year term, (3) make all Fed employees public employees with a better representation of the American public, and (4) align transparency at the Fed with the standards of other public institutions. 

We close the discussion by looking at Andy's research on the anchoring of inflation expectations, the need to do periodic evaluations of the Fed's objectives, and the question of why inflation has been persistently below target for the past five years. This was a thought-provoking conversation throughout. 

You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more shows are coming. 

Related Links
Andy Levin's homepage
Andy Levin's twitter account
Andy Levin's reform proposal

Macro Musings Podcast: Morgan Ricks

My latest Macro Musings podcast is with Morgan Ricks. Morgan is a law professor at Vanderbilt University where he specializes in financial regulation. Between 2009 and 2010, he was a senior policy adviser at the U.S. Treasury Department where  he dealt with financial stability initiatives and capital markets policies related to the financial crisis.

Before joining the Treasury Department, Morgan was a risk-arbitrage trader at Citadel Investment Group, a Chicago-based hedge fund. He previously served as a vice president in the investment banking division of Merrill Lynch & Co., where he specialized in strategic and capital-raising transactions for financial services companies.

Morgan is also the author of a new book “The Money Problem: Rethinking Financial Regulation”. He joined me to discuss his new book and its implications for policy. His book is timely and adds some needed perspective to understanding the Great Recession. I happened to review his book for National Review and so it was a nice follow up for me to get him on the show.

A key point he makes in the book, and one that we discuss on the show, is that the standard definition of money is too narrow. Money, properly understood, should include both retail and institutional money assets. This is a point I have repeatedly  made on this blog and in various papers. Morgan, however, does a much better job articulating this point and his chapter two "Taking the Money Market Seriously" by itself make the book a great investment. 

This understanding is important because it helps us better understand the financial crisis of 2007-2008. First, it helps us see that the institutional money assets were susceptible to a bank run just like retail money assets were before FDIC was introduced. The potential for a bank run with the institutional money assets came to fruition in 2007-2008. Second, this understanding also helps us see that the bank run caused a collapse in the broad money supply and that, in turn, helped bring about the sharp collapse in 2008-2009. Money still matters! It also, arguably, played a key role in anemic recovery that followed. 

The collapse in the money supply can be seen in the figure below. It shows several broad measures of the money supply that include both retail and institutional money assets. The measures come from the Center for Financial Stability:

We go on to discuss his proposal for fixing the run-prone nature of the banking system, what it would mean for banking, how policy would operate, and more. Once again, another fascinating conversation throughout. And if you want further details read his book.

You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more shows are coming. 

Related Links
Morgan Ricks Homepage
Morgan Ricks Twitter Account
Morgan Ricks Book 

Macro Musings Podcast: Hugh Rockoff

My latest Macro Musings podcast is with Hugh Rockoff. Hugh is a professor of economics at Rutgers University and has done extensive work on U.S. economic history. He is the coauthor of the popular textbook “History of the American Economy” and has served on the editorial boards of the Journal of Economic History and Explorations in Economic History.  

Hugh joined me for a fascinating conversation on U.S. monetary history. First, we discuss the idea of an optimal currency area (OCA) and consider how long it took the United States to become one. Hugh makes the case that it took about 150 years for the United States to become an OCA. As he notes, this does not bode well for the Eurozone. 

Second, we talked about the first two central banks of the United States, the 'free-banking' period, the monetary developments during the Civil War, and the flawed National banking system that emerged after the war.

Third, we covered one of the more underappreciated developments in U.S. monetary history: the existence of two floating currencies over the period 1861-1879. There was the well known 'Greenback' in Eastern United States, but there was also the 'Yellowback' in the Western United States. This development is not only interesting, but relevant for current conversations about the Eurozone splitting into two separate currencies. 

Finally, we concluded by talking about how some of the New Deal programs of the 1930s helped turn the United States into an optimal currency area. This was a great conversation throughout. 

You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more shows are coming!

Related Links
Hugh Rockoff's homepage
Hugh Rockoff's paper How Long Did It Take the U.S. to Become an Optimal Currency Area?
Hugh Rockoff's paper Yellowbaks out West and Greenbacks Back East

Macro Musings Podcast: Doug Irwin

My latest Macro Musings podcast is with Doug Irwin. Doug is a professor of economics at Dartmouth College, a research associate with the National Bureau of Economic Research, and former staff member of the President’s Council of Economic Advisors. Doug also served as an economist at the Federal Reserve’s Board of Governors.

Doug is one of the leading experts on trade economics and has published widely on the topic, in both journals and books. His books include Free Trade Under Fire, Against the Tide, an Intellectual History of Free Trade, and Peddling Protectionism: Smooth-Hawley and the Great Depression. Doug is currently working on The Battle Over U.S. Trade Policy a Historical Look at U.S. Trade Policy Since the Founding of the Country and has also researched the role the interwar gold standard played during the Great Depression. 

Doug joined me for a fascinating conversation on trade. We began the show by reviewing the main arguments for free trade and why it seems to have taken a black eye this election cycle. Among other things, we consider whether the sluggish recovery since the crisis has been a reason for why free trade has become so much more contentious, not only here but in other advanced economies. 

We then discuss some of the recent research on trade as well as some of the recent and not-so-good popular work on the topic. Along the way we consider whether free trade is a good idea for small, developing economies. 

To help put the trade debate in perspective, we then review the development of trade policy in U.S. history. Finally, we talk about the role the interwar gold standard played in creating the Great Depression. It was a great conversation throughout. This is timely topic. 

You can listen to the podcast on Soundcloud, iTunes,  or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more shows are coming!

Related Links

Doug Irwin's personal web page

Dout Irwin's twitter account

P.S. Here is a link to the upcoming monetary policy conference.

Macro Musings Podcasts: Nick Rowe

 

My latest Macro Musings podcast is with Nick Rowe. Nick is a professor of economics at Carleton University in Ottawa, a member of the CD Howe Institute’s Monetary Policy Council, and part of the Centre for Monetary and Financial Economics at Carleton University. Nick is well-known for his writing on monetary economics at the Worthwhile Canadian Initiative blog. 

Nick joins the show for a discussion of monetary economics. We talk about what makes macroeconomics fundamentally different than microeconomics. Nick argues that for short-run macroeconomics the key distinction is money, the one asset on every market. He notes that if you want to disrupt every market all you need to do is disrupt the demand for or supply of money. The potential for monetary disequilibrium, he argues, is at the heart of short-run macroeconomics.

We also discuss the difference between money created by banks (inside money) and money created by central banks (outside money). More importantly, we consider whether shocks to inside money or outside money is more important for monetary disruptions and recessions. 

Another interesting question we explore is whether outside money is a liability for the central bank. Outside money (i.e. the monetary base) is generally not considered a liability (like inside money) since it is fiat money. It is often considered a net asset for the public. A credible commitment to price stability, however, effectively makes outside money a liability for the government. This is a point that many observers miss. 

Finally, we discuss helicopter drops of money--Nick considers it "small beer"--and QE as well as the implications of Milton Friedman's thermostat analogy for understanding good central banking. This was a fascinating conversation throughout. If you enjoy Nick's blogging you will love this episode of the podcast.

You can listen to the podcast on Soundcloud, iTunes,  or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more shows are coming!

Related Links
Nick Rowe's coauthored blog - Worthwhile Canadian Initiative
Nick Rowe's twitter account