Macro Musings

Macro Musings is back with another bonus episode, as Sam Bell and Skanda Amarnath (Employ America) are joined by Julia Coronado (Macro Policy Perspectives) and David Beckworth (Macro Musings) to talk through the announcement of the Fed’s framework transition towards average inflation targeting. Specifically, this panel of guests discuss the implications of moving to an average inflation targeting regime, whether the shift may cause credibility problems for the central bank, how to continue to improve the Fed’s toolkit, and more.   Special thanks to the Employ America team for allowing us to use their webcast audio for this special Macro Musings bonus content.   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Employ America’s Twitter: @employamerica Employ America’s website: https://employamerica.org/ Sam Bell’s Twitter: @sam_a_bell Skanda Amarnath’s Twitter: @IrvingSwisher   Julia’s Twitter: @jc_econ Julia’s Macro Policy Perspectives profile: https://www.macr

Scott Lincicome is a senior fellow in Economic Studies at Cato Institute where he writes on international and domestic economic issues, including international trade, industrial policy and manufacturing and global supply chains. Scott joins David on Macro Musings to discuss what we've learned so far about the so-called China shock and where we are today in the trade war. Specifically, David and Scott discuss the historical rise of Chinese exports, its impact on US labor markets, how certain policies make it harder for US workers to adjust, and whether the Trump administration marks a genuine regime shift in international trade.   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Scott’s Twitter: @scottlincicome Scott’s Cato Institute profile: https://www.cato.org/people/scott-lincicome   Related Links:   *Testing the ‘China Shock’: Was Normalizing Trade with China a Mistake?”*by Scott Lincicome https://www.cato.org/publications/policy-analysis/testing-china-sh

Jim Tankersley is a tax and economics reporter for the New York Times and has written a new book on the middle class titled, *The Riches of This Land: The Untold, True Story of the American Middle Class.* Jim joins Macro Musings to talk about this book, and the state of the middle class in the US. David and Jim also discuss the history and golden era of the middle class as well as the steps policymakers can take to ensure we return to a path of robust economic growth.   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Jim’s Twitter: @jimtankersley Jim’s New York Times archive: https://www.nytimes.com/by/jim-tankersley   Related Links:   *The Riches of This Land: The Untold, True Story of the American Middle Class* by Jim Tankersley https://www.publicaffairsbooks.com/titles/jim-tankersley/the-riches-of-this-land/9781541767836/   *The Allocation of Talent and U.S. Economic Growth* by Chang-Tai Hsieh, Erik Hurst, Charles Jones, and Peter Klenow https://www.nb

Vincent Grossmann-Wirth is the Deputy Head of Monetary Policy Implementation Division at the Banque de France. Vincent joins Macro Musings to discuss the European Central Bank’s response to the COVID-19 crisis and what may lie ahead for the central bank. Specifically, Vincent and David discuss how the ECB’s structure and operating system compares to the US Federal Reserve System, the various dimensions of the ECB’s response to COVID-19, and what the ECB’s review of its operating framework portends for the future of monetary policy.   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Vincent’s Twitter: @VinceGW Vincent’s Banque de France profile: https://www.banque-france.fr/en/economics/economists-and-researchers/vincent-grossmann-wirth   Related Links:   *Monetary policy measures taken by the Eurosystem in response to COVID-19* by Vincent Grossmann-Wirth https://blocnotesdeleco.banque-france.fr/en/blog-entry/monetary-policy-measures-taken-eurosystem-respons

David Schleicher is a professor at Yale Law School, and as a returning guest to Macro Musings, he joins to talk about the historical role that the federal government has played in responding to state and local budget crises, including the municipal trllemma it faces. This trilemma says the federal government can only avoid two of the three following harms: (1) moral hazard for state budgets; (2) worsening recessions; (3) reducing future state and local infrastructure investment. Specifically, they discuss this trilemma as well as its implications for the COVID-19 crisis.   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   David’s Twitter: @ProfSchleich David’s Yale profile: https://law.yale.edu/david-n-schleicher   Related Links:   *Stuck! The Law and Economics of Residential Stagnation* by David Schleicher https://www.yalelawjournal.org/article/stuck-the-law-and-economics-of-residential-stagnation   *Hands On! Part I: The Trilemma Facing the Federal Governmen

Jon Sindreu is a reporter for the Wall Street Journal where he covers financial markets and the global transportation industry for the Heard on the Street column. Jon joins David on Macro Musings to discuss the role of global financial flows in driving global trade patterns. Specifically, Jon and David discuss the Bernanke view, loanable funds view, and money view of global financial system, as well as the implications for policy.   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Jon’s Twitter: @jonsindreu Jon’s Wall Street Journal profile: https://www.wsj.com/news/author/jon-sindreu?mod=rsswn   Related Links:   *Trade Wars Are Class Wars* by Matthew Klein and Michael Pettis https://yalebooks.yale.edu/book/9780300244175/trade-wars-are-class-wars   *Wages of Destruction* by Adam Tooze https://www.penguinrandomhouse.com/books/295490/the-wages-of-destruction-by-adam-tooze/   *Capital Flows, Asset Prices, and the Real Economy: A "China Shock" in the U.S. Real E

In this special Macro Musings episode, David is back in the spotlight, as he is interviewed by Claudia Sahm, director of macroeconomic policy at the Washington Center for Equitable Growth, as a guest on her *Stay-at-Home Macro Podcast*. David and Claudia discuss nominal GDP targeting at length, as they dive into what it is, why it’s important, and how it could be implemented in the wake of COVID-19. They also talk about the communication problems related to introducing NGDP targeting as well as David’s proposal for reforming the Fed’s current policies.   Special thank you to Claudia for letting us air this episode as a part of the Macro Musings catalog!   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   David’s Twitter: @DavidBeckworth David’s blog: http://macromarketmusings.blogspot.com/ David’s Mercatus profile: https://www.mercatus.org/scholars/david-beckworth   Claudia’s Twitter: @Claudia_Sahm Claudia’s Equitable Growth profile: https://equitablegrowth

Bill Nelson is a Chief Economist and Executive Vice President at the Bank Policy Institute, and formerly a Deputy Director of the Division of Monetary Affairs at the Federal Reserve Board, where his responsibilities included monetary policy analysis, discount window analysis, and financial institution supervision. Bill also worked closely with the Bank for International Settlements on liquidity regulations. Bill is a previous guest of Macro Musings, and he returns to the podcast to discuss the Fed’s increasing role in credit policy, the prospects for yield curve control and negative interest rates, and why makeup policy would be uniquely suited to the challenges presently facing the economy.   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Bill’s SIFMA profile: https://www.sifma.org/people/bill-nelson/ Bill’s BPI archive: https://bpi.com/tag/bill-nelson/ Bill’s American Banker archive: https://www.americanbanker.com/author/william-nelson-ab3618   Related

Jens Van’t Klooster is a postdoctoral fellow at KU Leuven and is also a member of the research group, A New Normative Framework for Financial Debt at the University of Amsterdam. Jens has recently coauthored an article titled *The Myth of Market Neutrality: A Comparative Study of the European Central Bank’s and Swiss National Bank’s Corporate Security Purchases.* He joins Macro Musings to talk about this article and some of his other work on central bank purchases and what it may mean for the Fed’s purchase of corporate bonds.   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Jens’s Twitter: @jvklooster Jens’s website: https://jensvantklooster.com/   Related Links:   *The Myth of Market Neutrality: A Comparative Study of the European Central Bank’s and Swiss National Bank’s Corporate Security Purchases* by Jens Van’t Klooster and Clement Fontan https://www.tandfonline.com/doi/full/10.1080/13563467.2019.1657077   David’s blog: macromarketmusings.blogspot.com

Matthew Klein is an economics commentator at Barron’s and is the author of a new book with Michael Pettis titled, *Trade Wars are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace.* Matthew is a returning guest to Macro Musings and he joins once again to talk about his book and the domestic roots of international trade conflicts – in the past as well as today. Specifically, David and Matthew also discuss the history of how industrialized strategies, in countries such as China, have set the stage for trade conflicts in the present day.   Transcript for the episode: https://www.mercatus.org/bridge/tags/macro-musings   Matthew’s Twitter: @M_C_Klein Matthew’s Barron’s profile: https://www.barrons.com/authors/8566   Related Links:   *Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace* by Matthew Klein and Michael Pettis https://yalebooks.yale.edu/book/9780300244175/trade-wars-are-class-wars   *The Great Rebal

Stephen Kirchner is a program director for trade and investment at the United States Center at the University of Sydney, and he was written widely on financial markets and economy policy in Australia. Stephen joins Macro Musings to talk about the journey of monetary policy in Australia that has transpired throughout the last few decades. Specifically, David and Stephen discuss the structure of the Reserve Bank of the Australia, the history of its inflation target, how Australia was able to avoid the worst of the Great Recession, and the actions they have taken to in response to the COVID crisis.   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Stephen’s Twitter: @insteconomics Stephen’s US Studies Center profile: https://www.ussc.edu.au/people/stephen-kirchner Stephen’s Substack page: https://stephenkirchner.substack.com/   Related Links:   *Money Too Tight to Mention: The Reserve Bank of Australia’s Financial Stability Mandate and Low Inflation* by Steph

Daniela Gabor is a professor of economics and macrofinance at the University of West England at Bristol, where she works on shadow banking, capital markets, and transnational banking. Daniela is also a returning guest to the podcast, and she has a new paper out on the burgeoning field of critical macrofinance and how it sheds light on the past great financial crisis (2007-2009) and the present COVID-19 crisis. She re-joins Macro Musings to discuss this paper and how it can offer important insight into the current global economic environment.   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Daniela’s Twitter: @DanielaGabor Daniela’s UWE Bristol profile: https://people.uwe.ac.uk/Person/DanielaGabor   Related Links:   *Critical Macro-Finance: A Theoretical Lens* by Daniela Gabor http://financeandsociety.ed.ac.uk/article/view/4408   *The Role of Time-Critical Liquidity in Financial Markets* by David Marshall and Robert Steigerwald https://www.chicagofed.org/

Darrell Duffie is a professor of finance at Stanford University, and he joins Macro Musings to discuss the treasury market problems that emerged in March 2020 and what can be done to avoid them in the future. Specifically, Darrell and David lay out the current state of financial markets, the ability of treasury markets, as currently designed, to handle demand shocks, and how central banking reforms can better ensure financial stability in the future.   Register here for the Cato Institute/Mercatus Center Webinar Series - *A Fed for Next Time: Ideas for a Crisis‐​Ready Central Bank*: https://www.cato.org/events/fed-next-time-ideas-crisis-ready-central-bank Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Darrell’s Twitter: @DuffieDarrell Darrell’s website: https://www.darrellduffie.com/ Darrell’s Stanford profile: https://www.gsb.stanford.edu/faculty-research/faculty/darrell-duffie   Related Links:   Bonus segment with Darrell: https://youtu.be/0Y3MTjgbP74  

Peter Stella is a former IMF official, where he led the Central Banking and Monetary and Foreign Exchange divisions, and he now hosts a webpage titled *Central Bank Archeology*. Peter is also a former guest of Macro Musings, and rejoins to talk about the COVID-19 crisis, central bank balance sheets, and more. David and Peter also discuss the dangers and challenges of the Fed’s off-balance sheet transactions, how the government should approach crisis financing, and who should be managing the country’s public debt.   The transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Peter’s Twitter: @Stellar_Consult Peter’s Voxeu profile: https://voxeu.org/users/peterstella0 Peter’s Research Gate archive: https://www.researchgate.net/profile/Peter_Stella   Related Links:   Peter's *Central Bank Archaeology* website: https://www.centralbankarchaeology.com/   *Macro Musings: Peter Stella on Debt, Safe Assets, and Central Bank Operations* https://macromusings.libsyn.com/144-pe

Adam Tooze is a professor of history at Columbia University, and is the author of many books, including his popular account of the 2007-2009 crisis, titled Crashed: How a Decade of Financial Crisis Changed the World. Adam joins David on Macro Musings to discuss the COVID-19 crisis, the Eurozone, and the future of central banking. Specifically, Adam and David break down recent events and risks in the global financial system, the future of the dollar as reserve currency, and the implications of the recent German-Franco debt deal for the Eurozone.   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Adam’s Twitter: @adam_tooze Adam’s Columbia profile: https://history.columbia.edu/faculty/adam-tooze/ Adam’s website: https://adamtooze.com/   Related Links:   *How Coronavirus Almost Brought Down the Global Financial System* by Adam Tooze https://www.theguardian.com/business/2020/apr/14/how-coronavirus-almost-brought-down-the-global-financial-system)   *The Death o

Alp Simsek is an associate professor of economics at MIT, and joins Macro Musings to talk about the link between financial markets, uncertainty and the COVID-19 crisis. Specifically, David and Alp discuss the dual absorption problem within financial markets, how supply shocks and demand shocks have inescapably become interwoven phenomenon, and why we should look to using macroprudential policy in the future.   The transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Alp’s Twitter: @alpsimsek_econ Alp’s MIT profile: https://economics.mit.edu/faculty/asimsek   Related Links:   Bonus segment with Alp: https://youtu.be/eoGxYcWmH9E   *A Risk-centric Model of Demand Recessions and Speculation* by Ricardo Caballero and Alp Simsek https://www.nber.org/papers/w23614   *A Model of Asset Price Spirals and Aggregate Demand Amplification of a ‘COVID-19’ Shock* by Ricardo Caballero and Alp Simsek https://www.nber.org/papers/w27044   *Prudential Monetary Policy* by Ricardo Cabal

Thomas Hoenig is a former vice chair of the FDIC, former president of the Kansas City Federal Reserve Bank, and is currently a distinguished senior fellow at the Mercatus Center at George Mason University. Tom’s research has focused on the long-term impact of the politicization of financial services, as well as the effects of government grant privileges on market performance. Tom joins David on Macro Musings to talk about COVID-19, the Fed's response to its economic impact, and the current state of banking in the United States.   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Thomas’s Twitter: @tom_hoenig Thomas’s Mercatus profile: https://www.mercatus.org/scholars/thomas-hoenig   Related Links:   Bonus segment with Thomas: https://youtu.be/CrA1WRtu0jc   David’s blog: macromarketmusings.blogspot.com David’s Twitter: @DavidBeckworth

Scott Sumner is the Ralph G. Hawtrey Chair of Monetary Policy at the Mercatus Center at George Mason University, Professor Emeritus of economics at Bentley University, and a research fellow at the Independent Institute. As a returning guest to the podcast, Scott joins Macro Musings to give his latest thoughts on the COVID-19 crisis and its implications for monetary policy. Specifically, David and Scott discuss how the Fed can conduct more aggressive monetary policy, what a level targeting regime should look like in the future, and the current progression toward negative interest rates.   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Scott’s Mercatus profile: https://www.mercatus.org/scholars/scott-sumner Scott’s blog: https://www.themoneyillusion.com/   Related Links:   Scott's bonus segment: https://www.youtube.com/watch?v=z8DXU_1oIsg&feature=youtu.be   *Reforming the Fed’s Toolkit and Quantitative Easing Practices: A Plan to Achieve Level Targeting

Lev Menand is a legal scholar at Columbia Law School and has previously worked for the New York Fed, the US Treasury Department, and the Financial Stability Oversight Council (FSOC). Lev Joins Macro Musings to talk about his new paper, *Unappropriated Dollars: The Fed’s Ad Hoc Lending Facilities and the Rules that Govern Them*. Specifically, David and Lev discuss opening up public Fed bank accounts, the importance of liquidity and credit facilities, and how Congress is using the CARES Act to skirt the Fed’s current legal mandates.   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Lev’s Twitter: @LevMenand Lev’s Columbia Law profile: https://www.law.columbia.edu/faculty/lev-menand   Related Links:   Bonus segment with Lev: https://youtu.be/N9qndjjju9A   *Unappropriated Dollars: The Fed’s Ad Hoc Lending Facilities and the Rules That Govern Them* by Lev Menand https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3602740   *FedAccounts* by Morgan Ricks, John C

Martin Hellwig is the director of the Max Planck Institute for Research on Collective Goods, and he joins Macro Musings to talk about the Eurozone and the implications of the recent German Constitutional Court (GCC) ruling for the future of the monetary union. David and Martin specifically discuss the background of the perceived Eurozone crisis, the power struggle between the GCC and the European Court of Justice, and how this case may lead to a total breakdown of the Eurozone.   Transcript for the episode can be found here: https://www.mercatus.org/bridge/tags/macro-musings   Martin’s MPI profile: https://www.coll.mpg.de/martin-hellwig   Related Links:   Bonus segment with Martin: https://youtu.be/1POrO_8VcM0   *The Leverage Ratchet Effect* by Anat Admati, Peter DeMarzo, Martin Hellwig and Paul Pfleiderer https://www.gsb.stanford.edu/faculty-research/working-papers/leverage-ratchet-effect   *German Court Has Set a Bomb Under the EU Legal Order* by Martin Sandbu https://www.ft.com/content/79484c01-b66b-4f81-