Xi’s rightly wary of Fed tightening
I have an op-ed in the AFR explaining why Chinese President Xi Jinping will be eyeing a prospective Fed tightening warily and why the RBA will lag the Fed. Full text below the fold.
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posted on 19 January 2022 by skirchner in Financial Markets, Monetary Policy
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The Reserve Bank of Australia’s pandemic response and the New Keynesian trap
The latest issue of Agenda includes a symposium on Economic Policy during Covid. Includes a contribution from me on ‘The Reserve Bank of Australia’s pandemic response and the New Keynesian trap.’ Note text was finalised mid-year. A lot of water under the bridge since then.
posted on 10 December 2021 by skirchner in Economics, Monetary Policy
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Reforming Australian Monetary Policy: My New Working Paper for the Mercatus Center
Last year, Scott Sumner invited me to contribute to the Mercatus Center Working Paper series on the topic of Australian monetary policy and how a nominal income targeting regime might be implemented in a small open economy. You can read the research summary here and the full paper here.
posted on 28 January 2021 by skirchner in Monetary Policy
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How the activist Fed will pile more pressure on the RBA
I have an op-ed in the AFR explaining how the Fed’s new inflation targeting strategy differs from the RBA and how it will put pressure on the RBA to lift its game.
posted on 31 August 2020 by skirchner in Monetary Policy
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My interview with David Beckworth’s Macro Musings podcast
My interview with David Beckworth’s Macro Musings podcast is now available. We talk inflation vs NGDP targeting, Australia’s recent macroeconomic history and what they put in the water at the BIS.
posted on 30 June 2020 by skirchner in Monetary Policy
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RBA money printer didn’t go brrrr
I’m in USSC’s The45th explaining why the RBA’s money printer didn’t go brrrr.
posted on 25 March 2020 by skirchner in Monetary Policy
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Policy Forum: Macroeconomic Issues in a Changing World
The March 2020 issue of the Australian Economic Review is out, with a Policy Forum including my article on The Effect of Changes in Monetary Policy on Consumer and Business Confidence. Be sure to also read Bruce Preston’s article in the same issue on The Case for Reform of the Reserve Bank of Australia Policy and Communication Strategy. There is a CAMA Working Paper version of Bruce’s article for those without access to the journal.
I’m pleased my paper contributed to the RBA walking back the contention in the November Board minutes that rate cuts hurt confidence. The draft paper was circulated within the Bank by John Simon, which was fitting given that it was essentially an update of his 2001 RBA RDP on the determinants of sentiment. John’s 2001 results hold-up quite well. Bruce’s paper also discusses why the contention in the November Board minutes is incoherent from a strategy and comms perspective.
The final capitulation came when Governor Lowe explicitly rejected the idea that rate cuts hurt confidence in testimony before the House Economics Committee, responding to some very effective questioning by Andrew Leigh.
posted on 28 February 2020 by skirchner in Monetary Policy
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RBA’s foot-dragging leaves economy dangerously exposed
I have an op-ed in the AFR on the lessons from the US experience with monetary policy for the RBA in the wake of yesterday’s official interest rate decision.
posted on 05 February 2020 by skirchner in Monetary Policy
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The evidence suggests Reserve Bank rate cuts don’t hurt confidence
In The Conversation, I round-up the US and Australian evidence on the effect of monetary policy on consumer confidence. There is little evidence for a perverse signalling effect from rate cuts on confidence, contrary to suggestions by the RBA Board.
posted on 04 February 2020 by skirchner in Monetary Policy
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The Effect of Monetary Policy on Consumer and Business Confidence
I have an article forthcoming in the March issue of the Australian Economic Review examining the US and Australian evidence on the effect of monetary policy on consumer and business confidence. It has been suggested that recent reductions in official interest rates might have a perverse signalling effect on consumer and business confidence. But that is not what the US and Australian evidence or my own estimates suggest. While consumers talk their book in relation to expectations for their own finances, when it comes to expectations for the economy as a whole, consumers and business are for the most part clear about rate cuts being expansionary for the economy.
As noted in the article, even if rates cuts did have a perverse signalling effect on confidence, this would not be an argument against monetary easing. It implies that the Reserve Bank should not act on its assessment of the economy, which is likely to be self-defeating.
Shane Wright writes up the paper for the SMH/Age in the context of the January consumer confidence release.
posted on 24 January 2020 by skirchner in Monetary Policy
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Now we know. Phil Lowe’s speech on QE
I have a piece in The Conversation on what we learned from Governor Lowe’s speech last night about its prospective approach to QE. As I note in the article, the risk now is that the RBA repeats the US Fed’s mistakes by moving too slowly.
posted on 27 November 2019 by skirchner in Monetary Policy
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The Treasurer should not let the RBA off the hook so easily
I have an op-ed in the AFR arguing that the Treasurer’s decision to leave its agreement with the RBA unchanged is a missed opportunity to hold the RBA accountable for its recent underperformance against mandate.
Robert Guy has a related piece in the same edition. The headline says it all.
The Treasurer just backed the RBA over what the market is telling us. We will see how that turns out.
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posted on 06 November 2019 by skirchner in Monetary Policy
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What is really driving monetary policy?
I get a mention in this insightful column by Parnell McGuinness noting that the debate over monetary policy is really about the allocation of responsibility for macroeconomic policy. RBA needs to step-up, not deflect.
posted on 16 October 2019 by skirchner in Monetary Policy
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Fiscal stimulus and open economy crowding-out
I’m quoted in this AFR story on the open economy crowing-out effects via the exchange rate and net exports that could be expected from a discretionary fiscal stimulus.
I make the case in more detail in this 2013 op-ed marking the 30th anniversary of the float Australian dollar.
posted on 12 October 2019 by skirchner in Fiscal Policy, Monetary Policy
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When interest rates approach zero, the RBA must rethink monetary policy
My explainer for the ABC Online on the RBA’s policy options as interest rates approach zero.
posted on 08 October 2019 by skirchner in Economics, Monetary Policy
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