Archive for December, 2019

The economics of negative interest rates: editors’ introduction

Thursday, December 19th, 2019

Thomas Palley, Louis-Philippe Rochon, Guillaume Vallet , Review of Keynesian Economics, April 2019.

The Great Recession (2008/9) triggered by the financial crisis of 2008 has had considerable impact on the conduct of monetary policy. Before the recession, monetary policy was largely based on a New Consensus-type macroeconomic model and it targeted inflation via a Taylor interest rate rule. The belief was that policy engineered changes in real interest rates had strong and predictable effects on output and inflation.

Based on that understanding, in the immediate wake of the financial crisis, central banks were quick to lower their policy interest rate to zero or near-zero. The expectation was for a speedy and robust V-shaped recovery, an expectation which was reflected in Federal Reserve Chairman Ben Bernanke’s comments in March 2009 about seeing “green shoots” of economic recovery.

When that V-shaped recovery failed to materialize, expectations shifted to a U-shaped recovery, and then in turn morphed into L-shaped recovery and talk of secular stagnation. READ MORE

Posted in Economics, Political Economy, U.S. Policy, Uncategorized | Comments Closed

A Conservative win will create a neoliberal hot zone and dissolve the UK: here’s how to stop it

Sunday, December 15th, 2019

I could not get this op-ed (written November 6, 2019) published as it was a mix of too dull & didactic, and too partisan or not partisan enough. Anyway, in the wake of the election, I think it was analytically spot on so I have decided to post it. Also, it makes clear the very special circumstances of the UK election. It is a gross distortion to extrapolate from the UK to the US. Unfortunately, that is exactly what elite US media (e.g. New York Times) and neoliberal Democrats are now doing.

Opinion polls are predicting the Conservative Party will romp home in the UK’s upcoming general election. Unfortunately, given the party’s current extremist inclinations, that stands to transform the UK into a neoliberal hot zone and also dissolve the UK within a decade.

The costs of a Conservative win

A Conservative majority government will quickly implement a Brexit that inflicts significant economic and political injury. Additionally, it will double-down on neoliberalism which has already done so much damage.

(more…)

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