Economics

John Cochrane talks about Fiscal Theory of Price Level and how can we apply this theory on the current macroeconomy.

In a recent IMF working paper "Overfitting in Judgment-based Economic Forecasts: The Case of IMF Growth Projections", economist Klaus-Peter Hellwig examined IMF's World Economic Forecasts (WEO) and check if the forecast model suffer from the problem of overfitting.

In this installment, we continue our discussion with Prof. Charles Calomiris, Henry Kaufman Professor of Financial Institutions at Columbia Business School. The topic of this installment is the missing role of politics in economics models of banking crises. We also discussed if Calomiris thinks macroeconomics has a similar problem.

The Bank of England on Thursday released its latest Monetary Policy Report, announcing its decision to lower its policy rate by 25 bps to 4%. The report contains a lot of excellent analysis, including on the recent rise in food prices, the effect of trade war as well as a review of its quantitative tightening policy. But one thing, a comparatively much less important thing, in the review just stuck in my mind...

A careful study of Hong Kong's currency peg that explain why the current low-interest rate environment can be interpreted as a result of the Hong Kong Monetary Authority's policy choice.

In recent months, the Global Economic Policy Uncertainty index has risen to a level much higher than periods around the 911 Terrorist Attack or the 2008 Financial Crisis, hence the conclusion that the economic policy is unprecedently uncertain now. But here is why you might not have to worry.

An explainer on how Hong Kong Linked Exchange Rate System works, what Aggregate Balance is, and how interest rate arbitrage help maintains Linked Exchange Rate System.

A series of papers by Stefan Avdjiev, Bilyana Bogdanova, Patrick Bolton, Wei Jiang, and Anastasia Kartasheva on this topic is highly recommended.

The Fiscal Theory of the Price Level says that money has value because the government accepts it for taxes, and inflation is fundamentally a fiscal phenomenon

Hong Kong Monetary Authority, the de facto central bank of Hong Kong, announced on April 22 that it will utilize the Fed's FIMA Repo facility to borrow USD 10 billion of cash.