a periodic reminder that Science and Nature do a terrible job of handling economics

It is my night!

Congratulations to Raffaella and Toru!

Glad to see that the topic of monetary/fiscal policy interaction is gaining traction. We need all minds that we can get to make progress Leonardo Melosi renato_faccini John Cochrane Klaus Masuch

Very interesting paper

Seems bad thehill.com/business/45973…

We discussed the issue two years ago at #JacksonHole in a paper with Leonardo Melosi and more recently in a QJE paper with Leo and renato_faccini: Monetary policy has changed, but fiscal policy arguably not. Both need to adjust

Investor overreaction to news events may reduce market volatility: “the sum total of different individual overreactions to multiple simultaneous shocks can dampen rather than amplify their combined market impact.” Francesco Bianchi Sydney Ludvigson
edwardconard.com/macro-roundup/…

As I mentioned before...

Well deserved! Congrats from the AEJ:Macro editorial board

Cool

I was wondering the same

We know what the Fed meant by 'transitory' in 2021 because the SEP produced explicit forecasts. These forecasts had three properties:

1. Rapid return to 2% inflation

2. Period of inflation < 2% (not just asymptote down to 2%)

3. Happens without any increase in fed funds rate

“A sticky inflation scenario is maybe not a baseline, but it is a realistic case. And I think investors and people looking at the economy need to start thinking about it:” Pimco’s Richard Clarida bloomberg.com/news/newslette…

US monetary and fiscal policies run in opposite directions. The Fed has hiked and is shrinking its balance sheet to tighten financial conditions. Treasury runs big deficits and shifted to short-term issuance, easing financial conditions. Realistically, this should delay Fed cuts.

Increase in spending even past the pandemic was predicted by my work with Leonardo Melosi and renato_faccini and is consistent with post-war experience described in the work of Sargent and coauthors