Secured and Unsecured Debt Over the Business Cycle
Filed this one under Does Debt have a role in Marco of the 21st Century?
Azariadis, Kaas, and Wen (2015) first decomposed total corporate debt into secured and unsecured debt to study the relationship between...
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 better control over the price level.The basic intuition is that...
What is the Saturated Level of Reserves?
The Saturated Level of Reserves or efficient level of reserves, is the point which the opportunity cost for banks to hold reserves disappears, and became indifferent towards holding more reserves. The reserve demand curve beyond this point becomes close to horizontal.
Central Bank’s Balance Sheet and the Rise of Reserves
The above figure shows the balance sheet of four major central banks from 2005 to 2015. Above the horizontal axis is the asset side of the balance sheet, below is the liability side. All...
Rajan on what “New Rule for Monetary Game” actually means
Raghuram Rajan, former Governer of Reserve Bank of India and now Professor of Finance at Chicago Booth, visited Hong Kong and gave a keynote speech in Asian Financial Forum last week. I am lucky...
ECB’s Praet on Eurozone’s Secular Stagnation
Peter Praet, Executive Board Member of the ECB:Central to this debate is whether the slow growth can be attributed to cyclical – and hence ultimately transitory – factors related to the financial crisis,...
Blanchard’s “Policy Model” v “Theory Model”
Back in November last year, Professor Olivier Blanchard discussed with me about his view that there should be four types of macroeconomics, and "theory models" like DSGEs is just one of them. Here is...
#WITGT21 Paragraph of the Day
By Simon Wren-Lewis:What is hardly ever said, so I make no apologies for doing so once more, is that macroeconomic theory has in some ways ‘had a good crisis’. Basic Keynesian macroeconomic theory says...
Bernanke on Trump’s Fiscal Policy
Ben Bernanke has a new blog post on Brookings. The focus of the post is to explain "the large difference between the reactions of the Fed and the markets to the change in fiscal prospects since the election"
What is Hysteresis?
Hysteresis is referred to the hypothesis that recessions may have permanent effects on the level of output relative to trend.