Economics

This is the second installment of our interview series "Where is the General Theory of the 21st Century?". In this second installment, we continue...

The Fed has changed it interest rate policy regime since 2008, from the so-called Corridor system, to the Floor system it is using right now. What is the different?

In their working paper "A Skeptical View of the Impact of the Fed's Balance Sheet," economists David Greenlaw, James D. Hamilton, Ethan Harris, and Kenneth D. West challenge some earlier studies that concluded QEs have a significant economic impact. Their major argument is that those research used simple event studies to quantify the impact of QE.

The latest BIS global liquidity indicators showed that the share of Non-bank USD denominated credit continued its rising trend.

Ricardo Reis, economics professor at the London School of Economics, explained that there were telling signs that the increase in cost of living started ealry-2021 was not a "transitory" phenomenon.

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?

"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

In this interview, Blanchard discussed his view on the role of DSGE model in modern Macroeconomics and policymaking. He also explained his decision to rewrite his macroeconomics textbooks after the Great Recession. His recent research on hysteresis was also discussed.

In a recent study "Bank Equity and Banking Crises" by Matthew Baron (of Cornell University), Emil Verner (MIT Sloan), and Wei Xiong (Princeton University), the three economists developed a comprehensive database of bank equity prices and banking crises with a full-sample of 46 countries from 1870-2016. They try to understand the dynamic between bank equity decline and banking crises.

The economics of tax evasion is a growing field in academic economics. There are much new exciting research trying to understand the mechanism behind global tax evasion. "The Missing Profits of Nations” by Thomas R. Tørsløv, Ludvig S. Wier and Gabriel Zucman is one of the most noteworthy research on the dynamic behind global tax evasions.