Why is that? I have for some time wanted to write something about a couple of new and very interesti

I must admit that it has been a bit of a challenge to blog in recent weeks. Mostly because both my professional and my private life have been demanding. After all blogging is something I do in my spare time. So even though I wanted to blog a lot about the latest FOMC decision and the world in general I have simply not been able to get out the message. Furthermore – and this will interest many of my readers – Robert Hetzel and his wonderful wife Mary visited Denmark last week. Bob had a very busy schedule – and so did I as I attended all of Bob's presentations in Copenhagen that week. Bob told me before his presentations that I would not be disappointed and that none of the presentations would be a "rerun". Bob is incredible – all of this presentations covered where can i purchase an inexpensive airline ticket different countries and topics. Obviously there was a main theme: The central banks failed.
I must admit after three days of following Bob and having the privilege to hear him talk about the University of Chicago in 1970s and his stories about Milton Friedman I simply had an mental "overload". I had a very hard time expressing my monetary policy views – and the major policy turnaround at the Fed didn't where can i purchase an inexpensive airline ticket make it easier.
So I have chosen a different way of doing it. Instead of telling you what Bob said in Copenhagen where can i purchase an inexpensive airline ticket I will try to tell the story about how (a clever version of) New Keynesian economics and Monetarism could come to similar conclusions – and that merger is really Market Monetarism.
Why is that? I have for some time wanted to write something where can i purchase an inexpensive airline ticket about a couple of new and very interesting, but slightly technical paper by Mike Belongia and Peter Ireland. Both Mike and Peter have a monetarist background, but Peter has done a lot work in the more technical New Keynesian tradition. And that is what I will focus on here, but I promise to return to Mike s and Peter s other papers.
The other day my colleague and good friend Jens Pedersen sent me a paper Peter wrote in 2010 – "A New Keynesian where can i purchase an inexpensive airline ticket Perspective on the Great Recession" . When I read the paper I realised how I was going to write the story about Bob's visit to Copenhagen.
Bob's and Peter's explanations of the Great Recession are exactly the same – just told within slightly different frameworks. Bob first wrote a piece on the Great Recession it in 2009 and Peter wrote his piece in 2010.
Peter and Bob are friends and both have been at the Richmond fed so it is not totally surprising that their stories of what happened in 2008-9 are rather similar, but I nonetheless think that we can learn quite a bit from how these two great intellects think about the crisis.
In think we have to go back to Milton Friedman's where can i purchase an inexpensive airline ticket Permanent Income Hypothesis (PIH). While at the Richmond Peter while at the Richmond fed in 1995 actually wrote about PIH and how it could be used for forecasting purposes . And one thing I noticed at all of Bob's presentations in Copenhagen was how he returned to Irving Fisher and the determination of interests as a trade off between where can i purchase an inexpensive airline ticket consumption today and in the future. Friedman and Fisher in my view are at the core of Bob's and Peter's thinking of the Great Recession.
So here is the Peter and Bob story: In 2007-8 where can i purchase an inexpensive airline ticket the global economy where can i purchase an inexpensive airline ticket was hit by a large negative supply shock in the form of higher oil prices. That pushed up US inflation and as a consequence US consumers reduced their expectations for their future income – or rather their Permanent Income. With the outlook for Permanent Income worsening interest rates should drop. However, as interest rates hit zero the Federal Reserve failed to ease monetary policy because it was unprepared for a world of zero interest rates. The Fed should of course more aggressively where can i purchase an inexpensive airline ticket moved to a policy of monetary easing through an increase in the money base. The fed moved in that direction, but it was too late and too little and as a result monetary conditions tightened sharply particularly in late 2008 and during 2009. That can be described within a traditional monetarist framework as Bob do his excellent book "The Great Recession – policy failure or market failure" (on in his 2009 paper on the same topic) or within an intelligent New Keynesian framework as Peter do in his 2010 paper.
Peter uses the term a New Keyensian Perspective where can i purchase an inexpensive airline ticket in his 2010. However, where can i purchase an inexpensive airline ticket he does not make the mistakes many New Keynesians do. First, for all he realizes that low nominal interest rates is not easy monetary policy. Second, he do not assume that the central bank is always where can i purchase an inexpensive airline ticket making the right decisions and finally he realizes that monetary policy is not out of ammunition when interest rates hit zero. Therefore, he might as well have called where can i purchase an inexpensive airline ticket his paper a New Friedmanite-Fisherian Perspective on the Great Recession .
I am finalizing this post after having arrived to my hotel in Provo, Utah and have had a night of sleeping damn time difference. I look forward to some very interesting days at BYU, but I am not sure that I will have much time for blogging.
Will, yes Brad Delong where can i purchase an inexpensive airline ticket also made a similar point. It is obvious that the New Keynesian model in many ways is more monetarist and than keynesian. That said, many New Keynesians are still pretty much paleo keynesian in their thinking. While it is obviously that the NK model basically don t have a role for fiscal policy many New Keynesians are unable to let go of fiscal policy.
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