06 - Ramesh Ponnuru on the Politics of Monetary Policy

Olivier Blanchard is the C. Fred Bergsten Senior Fellow at the Peterson Institute for International Economics and the former Director of Research at the International Monetary Fund. Today, he joins the show to discuss working at the IMF in the midst of the 2008 financial crisis and Great Recession. He also shares his thoughts on the limitations of current-day macroeconomic models as well as some suggestions to improve them. David’s blog: macromarketmusings.blogspot.com/ Macro Musings podcast site: macromusings.com David’s Twitter: @DavidBeckworth Olivier Blanchard’s MIT profile: https://economics.mit.edu/faculty/blanchar Olivier Blanchard’s PIIE profile: https://piie.com/experts/senior-research-staff/olivier-blanchard Olivier Blanchard’s Twitter: @ojblanchard1 Related links: “Do DSGE Models Have a Future?” by Olivier Blanchard https://piie.com/publications/policy-briefs/do-dsge-models-have-future “On the Need for (At Least) Five Classes of Macro Models” by Olivier Blanchard https://piie.com/blogs/realtime-economic-issues-watch/need-least-five-classes-macro-models “Will Interest Rates Lead to Fiscal Crisis?” by Olivier Blanchard https://piie.com/publications/policy-briefs/will-rising-interest-rates-lead-fiscal-crises “Getting Serious About Wage Inflation in Japan” by Olivier Blanchard and Adam Posen https://asia.nikkei.com/Viewpoints-archive/Viewpoints/Getting-serious-about-wage-inflation-in-Japan “Monetary Policy: Science or Art?” by Olivier Blanchard https://economics.mit.edu/files/742

9 Okt 20171h 1min

JW Mason is an assistant professor of economics at John Jay College and a fellow at the Roosevelt Institute. Today, he joins the show to discuss his recent paper, “What Recovery? The Case for Continued Expansionary Policy at the Fed?” JW argues that the recovery from the Great Recession was unusually weak. Furthermore, the American economy is still not at full employment, and, as a result, potential GDP is continually underestimated. In order to get the economy back to full employment, JW argues greater monetary expansion is needed. David’s blog: macromarketmusings.blogspot.com/ Macro Musings podcast site: macromusings.com David’s Twitter: @DavidBeckworth JW Mason’s website: http://jwmason.org/ JW’s Twitter: @JWMason1 “What Recovery? The Case for Continued Expansionary Policy at the Fed?” http://rooseveltinstitute.org/what-recovery/

2 Okt 201759min

Caroline Freund is a senior fellow at the Peterson Institute for International Economics (PIIE). Previously, she served as the chief economist for the Middle East and North Africa at the World Bank. She joins the show to discuss her career in trade policy and her work on the slowdown in global trade since the Great Recession. Finally, she also shares her thought on President Trump’s trade policies. David’s blog: macromarketmusings.blogspot.com/ Macro Musings podcast site: macromusings.com David’s Twitter: @DavidBeckworth Caroline’s PIIE profile: https://piie.com/experts/senior-research-staff/caroline-freund?author_id=906 Caroline’s Bloomberg archive: https://www.bloomberg.com/view/contributors/AQnL_eq2K8M/caroline-freund Caroline’s Twitter: @CarolineFreund Related links: *Rich People, Poor Countries: The Rise of Emerging-Market Tycoons and Their Mega Firms* by Caroline Freund (assisted by Sarah Oliver) https://piie.com/bookstore/rich-people-poor-countries-rise-emerging-market-tycoons-and-their-mega-firms “The Global Trade Slowdown and Secular Stagnation” by Caroline Freund https://piie.com/blogs/trade-investment-policy-watch/global-trade-slowdown-and-secular-stagnation “Invest in minds, not miners” by Caroline Freund and Christine McDaniel https://www.bloomberg.com/view/articles/2017-07-06/the-u-s-needs-to-invest-in-minds-not-miners “U.S. Needs Trade Deals, Not ‘Remedies’” by Caroline Freund https://www.bloomberg.com/view/articles/2017-08-14/u-s-needs-china-trade-deals-not-remedies “The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade” by David H. Autor, David Dorn, and Gordon H. Hanson http://www.nber.org/papers/w21906 "Trump's Trade Pullout Roils Rural America" by Adam Behsudi http://www.politico.com/magazine/story/2017/08/07/trump-tpp-deal-withdrawal-trade-effects-215459

25 Sep 20171h

Lawrence Summers is the Charles W. Eliot University Professor and President Emeritus of Harvard University. Previously, he served as U.S. Treasury Secretary under President Bill Clinton and Director of the National Economic Council under President Obama. In today’s episode, he joins the show to discuss his work as both an academic and a policymaker. He also shares his thoughts on monetary and fiscal policy since the recent financial crisis and Great Recession. Finally, he explains why he has recently become more open to nominal GDP targeting. You can read the transcript to the full interview here: https://www.dropbox.com/s/sya7syeqgjp1gxq/Summers_transcript.doc?dl=0 David’s blog: macromarketmusings.blogspot.com/ Macro Musings podcast site: macromusings.com David’s Twitter: @DavidBeckworth Lawrence Summers’ website: http://larrysummers.com/ Larry Summers’ Washington post archive: https://www.washingtonpost.com/people/lawrence-summers/?utm_term=.2cf6f67e2ce9 Larry Summers’ Twitter: @LHSummers Related links: “Inflation and Activity – Two Explorations and Their Monetary Policy Implications” by Olivier Blanchard, Eugenio Cerutti, and Lawrence Summers https://www.imf.org/external/pubs/ft/wp/2015/wp15230.pdf “The Permanent Effects of Fiscal Consolidation” by Antonio Fatas and Larry Summers http://www.nber.org/papers/w22374 “5 Reasons Why the Fed Might Be Making a Mistake” by Larry Summers https://www.washingtonpost.com/news/wonk/wp/2017/06/14/larry-summers-5-reasons-why-the-fed-may-be-making-a-mistake/?utm_term=.3e48ce5bd142 *** [Also, be sure to subscribe to Mercatus’ “Conversations with Tyler” podcast, hosted by Tyler Cowen. Tyler also interviewed Larry Summers and discussed a wide range of topics, including trade policy, immigration, asset-pricing, monopolies, and even table tennis. You can listen to that conversation here: https://soundcloud.com/conversationswithtyler/28-larry-summers-on-macroeconomics-mentorship-and-avoiding-complacency You can also find previous episodes of “Conversations with Tyler” at https://medium.com/conversations-with-tyler]

18 Sep 201738min

Eric Hilt is a professor of economics and economic historian at Wellesley College. Today, he joins the show to discuss his new journal article *Economic History, Historical Analysis, and the “New History of Capitalism,”* which examines the growing debate between economic historians and historians of capitalism over issues such as slavery and economic growth. Eric also shares his thoughts on the “Cliometric Revolution,” which transformed the way many economic historians conduct their analysis. David’s blog: macromarketmusings.blogspot.com/ Macro Musings podcast site: macromusings.com David’s Twitter: @DavidBeckworth Eric Hilt’s Wellesley profile: http://www.wellesley.edu/economics/faculty/hilte Related links: *Economic History, Historical Analysis, and the “New History of Capitalism”* by Eric Hilt. Journal of Economic History, June 2017. https://www.cambridge.org/core/services/aop-cambridge-core/content/view/E17BEA48B930F6F25F328B5A79332A6E/S002205071700016Xa.pdf/economic_history_historical_analysis_and_the_new_history_of_capitalism.pdf *Economic Effects of Runs on Early 'Shadow Banks': Trust Companies and the Impact of the Panic of 1907* by Carola Frydman, Eric Hilt, and Lily Y. Zhou. NBER, July 2012 http://www.nber.org/papers/w18264 *Time on the Cross: The Economics of American Slavery* by Robert Fogel and Stanley Engerman https://www.amazon.com/Time-Cross-Economics-American-Slavery/dp/0393312186 *Railroads and American Economic Growth: Essays in Econometric History* by Robert Fogel *Old South, New South: Revolutions in the Southern Economy since the Civil War* by Gavin Wright https://www.amazon.com/Old-South-New-Revolutions-Southern/dp/0807120987

11 Sep 201759min

JW Verret is an associate law professor at the Antonin Scalia School of Law at George Mason University and a senior affiliated scholar at the Mercatus Center. Previously, he served as the chief economist on the House Financial Services Committee. Today, he joins the show to discuss his experience working on Capitol Hill and his thoughts on the CHOICE Act, the current legislation designed to replace the Dodd-Frank Act. David’s blog: http://macromarketmusings.blogspot.com/ Macro Musings podcast site: macromusings.com David’s Twitter: @DavidBeckworth JW Verret’s Mercatus profile: https://www.mercatus.org/j-w-verret JW Verret’s GMU profile: https://www.law.gmu.edu/faculty/directory/fulltime/verret_jw Related links: “Demystifying the Foggy Haze of Federal Reserve Policymaking” by JW Verret http://thehill.com/blogs/pundits-blog/finance/341412-demystifying-the-foggy-haze-of-federal-reserve-policymaking

4 Sep 201757min

Adam Millsap is an assistant director at the L. Charles Hilton Center at Florida State University and a senior affiliated scholar at the Mercatus Center. Today, he joins the show to discuss how different regional economies can lead to business cycles at the regional and state levels, rather than the federal level. This creates difficulty for monetary policy at the federal level as looser monetary policy may be appropriate for states like West Virginia, but may not be appropriate for states like California. He and David also discuss the decline of inter-state labor mobility and how bad regulation deters people from moving to areas with better job prospects. Description: David’s blog: macromarketmusings.blogspot.com/ Macro Musings podcast site: macromusings.com/ David’s Twitter: @DavidBeckworth Adam Millsap’s website: http://adammillsap9.wixsite.com/personal Adam Millsap’s Mercatus profile: https://www.mercatus.org/adam-millsap Adam Millsap’s Twitter: @AA_Millsap Related links: “Recessions Don’t Have the Same Impact on Every City” https://www.forbes.com/sites/adammillsap/2016/07/19/recessions-dont-have-the-same-impact-on-every-city/#58f3a28478d2 “State Fiscal Rankings https://www.mercatus.org/statefiscalrankings

28 Aug 201757min

Betsey Stevenson is an associate professor of public policy at the University of Michigan and previously served as the chief economist at the U.S. Labor Department. Today, she joins the show to discuss her experience working at the Labor Department at a time of high unemployment as well as her more recent research on challenges in the U.S. labor market. Specifically, she talks about the problem of decreased male labor force participation and why “manly men need to do more girly jobs.” David’s blog: http://macromarketmusings.blogspot.com/ Macro Musings podcast site: https://macromusings.com/ David’s Twitter: @DavidBeckworth Betsey Stevenson’s University of Michigan profile: http://fordschool.umich.edu/faculty/betsey-stevenson Betsey Stevenson’s Twitter: @BetseyStevenson Related links: “Manly Men Need to More Girly Jobs” by Betsey Stevenson https://www.bloomberg.com/view/articles/2016-12-07/manly-men-need-to-do-more-girly-jobs “Want to Help the Economy? Learn to Trust” by Betsey Stevenson https://www.bloomberg.com/view/articles/2016-07-05/want-to-help-the-economy-learn-to-trust “Trust in Public Institutions over the Business Cycle” by Betsey Stevenson and Justin Wolfers http://users.nber.org/~bstevens/Papers/TrustinPublicInstitutions.pdf

21 Aug 20171h 3min