Alice Rivlin, who died on the 14th May 2019, was a legend in the Washington policy community. In "Alice Rivlin: A career spent making better public policy," Fred Dewes interviewed Rivlin for the Brookings Cafeteria Podcast on March 8, 2019.
For a long time, the Federal Reserve (and other central banks) carried out monetary policy with little or no explanation. The idea was that the market would figure it out. But in the last few decades, there has been an explosions of communication and transparency from the Fed (and other central banks), consisting both of official statements and an array of public speeches and articles by central bank officials. On one side, a greater awareness has grown up that economic activity isn't just influenced by what the central bank did in the past, but on what it is expected to do in the future. But does the this "open mouth" approach clarify and strengthening monetary policy, or just muddle it?
Argentina has been “printing money for the people” MMT-style for many years. Its wrongly-called “inclusive monetary policy” of the past - print money to finance massive government spending - has driven the country to massive inflation and depression.
In a lot of economic models, firms decide to hire based on whether they need more workers to meet the demand for their products; in the lingo, labor is a "derived demand," derived from the desired level of output. Beyond that, economic models often don't pay much attention to the details of how hiring happens, assuming that profit-maximizing firms will figure out relatively cost-effective ways of gathering and keeping the skills and workers they need. But what if that hypothesis is wrong?
We have been alerting for months about the excessively optimistic expectations on the possible trade agreement between China and the US.
Back in the 1960s, the poverty rate for those over-65 was about 10 percentage points higher than the poverty rate for children under 18. For example, in 1970 the over-65 poverty rate was about 25%, while the under-18 poverty rate was 15%. But government support for the elderly rose substantially, and in the 1970s, the over-65 poverty rate dropped below the under-18 rate. For the last few decades, the under-18 poverty rate has been 7-9 percentage points higher than the over-65 poverty rate. In 2017, for example, the under-18 poverty rate was 17.5%, while the over-65 poverty rate was 9.2%. (For the numbers, see Figure 6 in this US Census report from last fall.)
· Populist politicians are turning to Modern Monetary Theory · Fiscal stimulus has not led to significant inflation during the last decade · MMT is too radical to be adopted in full but the allure of fiscal expansion is great · Asset markets will benefit over the medium-term