tag:blogger.com,1999:blog-8702840202604739302.post8678944296988920115..comments2024-03-28T03:38:53.734-07:00Comments on MacroMania: The St. Louis Fed's Macroeconomic OutlookDavid Andolfattohttp://www.blogger.com/profile/12138572028306561024noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-8702840202604739302.post-92110939490916741212017-07-16T06:50:15.023-07:002017-07-16T06:50:15.023-07:00You might want to look at this recent paper publis...You might want to look at this recent paper published on REStat. Quite supportive of the low growth regime argument: <br /><br /> Juan Antolin-Diaz & Thomas Drechsel & Ivan Petrella, 2017. "Tracking the Slowdown in Long-Run GDP Growth," The Review of Economics and Statistics, MIT Press, vol. 99(2), pages 343-356, May.<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-22376516951522308382017-07-10T07:16:05.457-07:002017-07-10T07:16:05.457-07:00As you point out, the case for leaning is not yet ...As you point out, the case for leaning is not yet strong. It seems that rate increases have in part gained favor within the FOMC as a means to guard against (or appear to guard against) financial system instability, despite the convention favoring macroprudential policy for this purpose. Alternatively, perhaps all FOMC members have converted to Neo-Fisherism. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-40008886466418324702017-04-21T09:31:38.261-07:002017-04-21T09:31:38.261-07:00Unlike reserves, U.S. treasury debt can circulate ...Unlike reserves, U.S. treasury debt can circulate outside the banking system. It is used widely as collateral in repo and can be rehypothecated. David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-29606169692065991872017-04-21T08:04:50.432-07:002017-04-21T08:04:50.432-07:00Thanks for the reply. I'm still missing someth...Thanks for the reply. I'm still missing something. Suppose a non-depository institution buys bonds from the Fed. Now that non-depository institution has more treasuries and fewer deposits. Are deposits not considered safe and liquid assets? PJGhttps://www.blogger.com/profile/16735742181830832193noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-43747432294907221002017-04-21T03:20:00.677-07:002017-04-21T03:20:00.677-07:00I'm looking at that third graph ("the ann...I'm looking at that third graph ("the annualized ten-year growth rate"), in particular the 1970s. You write, "What determines a growth regime? Government policies may play a role..." I agree.<br /><br /><a href="https://krugman.blogs.nytimes.com/2008/02/10/postmodern-recessions/?_r=0" rel="nofollow">Each of the slumps — 1969-70, 1973-75, and the double-dip slump from 1979 to 1982 — were caused, basically, by high interest rates imposed by the Fed to control inflation.</a><br /><br />The "quite dramatic" "slowdown in the 1970s" visible in that third graph follows from the high density of recessions in those inflationary years. Compared to the 1960s, in the 1970s there were about twice as many <a href="http://newarthurianeconomics.blogspot.com/2017/03/about-that-slow-growth-in-1970s.html" rel="nofollow">months of recession per year</a>. That pushes the annualized ten-year growth rate down.<br /><br />Growth during the growth phase of business cycles in the 1970s was about as good as growth in the growth phase of the cycle in the 1960s. But there was less time for growth-phase growth in the 1970s because of all those policy-induced recessions.<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-50286366894160635012017-04-20T12:01:45.990-07:002017-04-20T12:01:45.990-07:00Great question. The label "safe" is a bi...Great question. The label "safe" is a bit misleading in this context. Perhaps "liquid" might be a better term. It may seems strange to think of treasuries being more liquid than reserves, but in a sense they are. In particular, treasuries can be held (and effectively used as money) by non-depository institutions. David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-23711448305211796462017-04-20T11:28:21.884-07:002017-04-20T11:28:21.884-07:00I'm trying to understand the first point of th...I'm trying to understand the first point of the last paragraph - that selling treasuries increases the stock of safe assets. It seems to imply that reserves at the Fed shouldn't be counted in the stock of safe assets. I understand that only banks can hold reserves and that treasuries are useful to other financial intermediaries. Still, for every dollar of treasuries the Fed sells, at least a dollar of deposits disappears, right? Is the point that deposits are not considered safe assets?PJGhttps://www.blogger.com/profile/16735742181830832193noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-68060140058371043342017-04-20T00:32:46.136-07:002017-04-20T00:32:46.136-07:00I wonder if this is partly a baby boomer issue. Th...I wonder if this is partly a baby boomer issue. The per capita slowdown in the 1970s happened when there was a surge of young adults starting out in the labor market, lowering average productivity. The recent slowdown has happened as boomers leave the labor force.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-37104268409685207062017-04-19T17:20:48.210-07:002017-04-19T17:20:48.210-07:00Wow; that's wild. I've got to think on tha...Wow; that's wild. I've got to think on that image. Thank you!Conscience Warriorhttps://www.blogger.com/profile/13487448481194494386noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-76939842626107757452017-04-19T13:39:31.517-07:002017-04-19T13:39:31.517-07:00Hi CW, I had my RA construct the series you sugges...Hi CW, I had my RA construct the series you suggested. It looks quite dramatic. Thanks for suggesting (I will post it). David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-45662995977840054862017-04-19T12:40:13.823-07:002017-04-19T12:40:13.823-07:00Small point, David: Maybe the ten-year growth-spur...Small point, David: Maybe the ten-year growth-spurt chart would look interesting if you plotted annualized ten-year growth quarter-by-quarter. Forgive me for not showing an example; it's not laziness; my work computer makes it hard...Conscience Warriorhttps://www.blogger.com/profile/13487448481194494386noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-11734043319690978802017-04-19T12:26:03.414-07:002017-04-19T12:26:03.414-07:00I think of the large balance sheet as the Fed acti...I think of the large balance sheet as the Fed acting as a buyer of last resort, holding assets that others don't want - perhaps due to the regulatory constraints that apply to institutions other than the central bank. For example: it is not subject to capital constraints, and can buy as many MBS as it wants.<br /><br />You are right that reserves are only useful to banks within the regulated system. But for them, reserves are *very* useful because of the way the risk-weighting system treats them. If a bank sells MBS to the central bank in exchange for reserves, this frees up some regulatory capital that can be used to make new loans. In bad times, this pipeline of lending against real estate and selling to the central bank is a way to keep NGDP moving along a desired path.<br /><br />Another way to think of it is that large holdings of central bank reserves are a way to accommodate a large demand for deposits within the regulated system when banks don't have better options available for creating money.Anwerhttps://www.blogger.com/profile/08277173974258559733noreply@blogger.com