The repo spike is not liquidity crisis; it is a crisis for Fed’s floor...
The floor system needs a cap on top of it. The sooner the Fed realizes it, the better they will be prepared for the coming financial turmoil.
What is New Keynesian DSGE Models?
DSGE is a methodology for a wide range of macroeconomics models. One of the most common formulations is the so-called New Keynesian model. New Keynesian economics can be interpreted as an effort to combine the methodological tools developed by real business cycle theory with some of the central tenets of Keynesian economics tracing back to Keynes’ own General Theory.
CoCo issuance and bank fragility
A series of papers by Stefan Avdjiev, Bilyana Bogdanova, Patrick Bolton, Wei Jiang, and Anastasia Kartasheva on this topic is highly recommended.
Phillips Curve is Not a Straight Line…
A story about three economists agree with the prevailing consensus that the Phillips Curve of the US is flattened in the last few decades on the one hand; and dispute the idea that the Phillips Curve is dead on the other.
Why Fed projects to cut rates next year even it expects failure to reach...
Inflation projections by Fed officials show that PCE inflation will not reach 2% by the end of 2025. Why the Fed expects to cut rate next year then?
What is Payment on Reserves Process?
The payment on reserve process proposed by Robert Hall and Ricardo Reis is a way of remunerating reserves which would give the central bank...
Shadow Fed Chair — and Powell’s nuclear option to counter it
President Trump's plan to install a "Shadow Chair" months before Jerome Powell's term ends will definitely reshape US monetary policy — but it could face a surprising challenge from Powell himself.
Why the Fed’s Standing Repo Facility Isn’t for Daily Use: An Explainer
"The [Standing Repo Facility (SRF)] rate is set at the top of the FOMC’s target range for the federal funds rate. This combination of an ample supply of reserves and an SRF rate at the top of the target range reduces the day-to-day reliance on the facility except during periods of significant upward pressure on rates resulting from strong liquidity demand or market stress," said John Williams
Akerlof on Keynesian-neoclassical synthesis’s departure from Keynes
George Akerlof explains how the Keynesian- neoclassical synthesis dominated the field, and what problems this dominance resulted.
BIS’s latest hunt for Zombie (firms)
In the latest BIS Quarterly Review, researchers Ryan Banerjee and Boris Hofmann consolidated some of the earlier research to illustrate the problem of zombie firms. They argued that the rise of zombies predated the 2008 financial crisis, and has since been dragging down the productivity of the real economy.
