Macroeconomics

In a recent post, we introduced the Multivariate Core Trend (MTC), a measure of inflation persistence in the core sectors of the personal consumption expenditure (PCE) price index. With data up to February 2022, we used the MCT to interpret the nature of post-pandemic price spikes, arguing that inflation dynamics were dominated by a persistent component largely common across sectors, which we estimated at around 5 percent. Indeed, over the year, inflation proved to be persistent and broad based, and core PCE inflation is likely to end 2022 near 5 percent. So, what is the MCT telling us today? In this post, we extend our analysis to data through November 2022 and detect signs of a decline in the persistent component of inflation in recent data. We then dissect the layers of inflation persistence to fully understand that decline.

The use and abuse of MMT (Part 2) Michael Hudson, Dirk Bezemer, Steve Keen and Sabri Öncü The first part of this article appeared in…

The post The use and abuse of MMT (Part 2) first appeared on Economic Reform Australia.

Monetary and fiscal policy frameworks for Australia part 1 John Haly In September 2022, the Reserve Bank of Australia was opened to public assessment. The…

The post Monetary and fiscal policy frameworks for Australia part 1 first appeared on Economic Reform Australia.

A Bank for International Settlements study says 60+ trillion dollars of off-the-books currency swaps could be a profound, systematic risk. Robert Johnson joins Paul Jay on theAnalysis.news.

Transcript

Paul Jay

Hi, I’m Paul Jay. Welcome to theAnalysis.news. In a few seconds, I’ll be back with Rob Johnson to talk about a ticking time bomb in the global financial system. Be back in just a few seconds. Please don’t forget the donate button at the top of the website, and subscribe on YouTube. Most importantly, come to the website and get on our email list, and I’ll be back, as I said.

I hate to be the bearer of more bad news, but there’s a story that appeared in the Business Press but received almost no attention in mass media. I think capitalism is in chaos and is out of solutions. If the climate crisis wasn’t enough to convince you, here’s another example.

A critical reappraisal of the case in favor of monetary tightening pressed by inflation hawks is overdue.

This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since September 2022.

The COVID-19 pandemic, geopolitical tensions, and distinct economic conditions bring challenges to economies worldwide. These key themes provided a backdrop for the fifth bi-annual Global Research Forum on International Macroeconomics and Finance, organized by the European Central Bank (ECB), the Federal Reserve Board, and Federal Reserve Bank of New York in New York in November. The papers and discussions framed important issues related to the global economy and financial markets, and explored the implications of policies that central banks and other official sector bodies take to address geopolitical developments and conditions affecting growth, inflation, and financial stability. A distinguished panel of experts shared diverse perspectives on the drivers of and prospects for inflation from a global perspective. In this post, we discuss highlights of the conference. The event page includes links to videos for each session.

An obituary for Axel Leijunhufvud (Sept 6, 1933 - May 5, 2022)

Axel Leijunhufvud’s sad passing on May 5^th has rightly stimulated a round of tributes to a thinker of uncommon breadth. But there is perhaps reason to doubt how widely appreciated the diversity of his thinking really was. Leijunhufvud changed the colors of his economic reasoning in response to many strands of 20th-century discussion, repainting each one. He had an ample palette and his color mixes were always interesting – an artist of macroeconomics indeed. Never lacking confidence and blessed with understated charisma, he was a member of one of Sweden’s oldest aristocratic families. Lionhead is a literal translation of his surname. (Old Swedish noble names can be peculiar. For example, Oxstars and Swineheads still roam the land.)

Evidence-based answers to the main (policy) questions concerning the return of high inflation

A specter is haunting the US—the specter of stagflation

Financial Times’ Martin Wolf (2022) is the latest influential voice sounding the alarm bell on ‘the threat of stagflation’ and calling for the Fed to drastically raise interest rates to bring inflation down to its target level. Published on May 24, Wolf’s diagnosis of where the stagflation in the US economy is coming from reflects current establishment opinion: nominal demand, fuelled by over-expansionary fiscal and monetary policies during the COVID-19 crisis, is exceeding US supply. To bring down inflation, these macroeconomic policy errors need to be corrected convincingly and as soon as possible. This is how Wolf puts it:

Are there alternative, less socially costly, ways to bring inflation down?