Macro Musings

Ricardo Reis is a professor of economics at the London School of Economics and the editor of the prominent Journal of Monetary Economics. He joins the show to discuss the state of macroeconomics, which has recently come under attack from many commentators who claim the discipline lacks empirical rigor and has failed to accurately forecast economic conditions. Ricardo gives a nuanced defense of macroeconomics, arguing macroeconomic research is, indeed, quite vibrant and empirical. Furthermore, he argues that although there have been shortcomings, macroeconomics has greatly improved over the past few decades in its ability to forecast and inform policy debates. David Beckworth’s blog: http://macromarketmusings.blogspot.com/ Ricardo Reis’s LSE profile: http://personal.lse.ac.uk/reisr/ David’s Twitter: @DavidBeckworth “Is Something Really Wrong with Macroeconomics?” by Ricardo Reis http://personal.lse.ac.uk/reisr/papers/17-wrong.pdf “Achieving Price Stability by Manipulating the Central Bank's Payment on Reserves

Matt Yglesias is a columnist and editor for the news website Vox, which he co-founded in 2014. Today, he joins the show to talk about the politics shaping Fed policy. Matt discusses why he thinks President Barack Obama’s biggest policy failure was in failing to appoint members to the Fed's Board of Governors. He also shares his thoughts on where the Left and Right currently stand on monetary issues. David’s blog: http://macromarketmusings.blogspot.com/ Matt Yglesias’s Vox archive: https://www.vox.com/authors/matthew-yglesias David’s Twitter: @DavidBeckworth Matt Yglesias’s Twitter: @MattYglesias Related links: “Obama’s Biggest Economic Policy Mistake” by Matt Yglesias https://www.vox.com/2014/9/17/6219247/obamas-biggest-economic-policy-mistake “Fed Up” by Matt Yglesias (Feature in *Democracy: A Journal of Ideas*) http://democracyjournal.org/magazine/20/fed-up/

In this week’s episode, David is joined by two guests, who make a case for economic optimism. Michael Mandel, chief economist at the Progressive Policy Institute, and Bret Swanson, president of Entropy Economics and visiting scholar at the American Enterprise Institute, are the co-authors of the new paper, “The Coming Productivity Boom: Transforming the Physical Economy with Information.” Michael and Bret argue that, despite the slowdown in productivity of the last few decades, innovations in information technology such as artificial intelligence are going remake our economy for the better. David’s blog: http://macromarketmusings.blogspot.com/ Michael Mandel’s homepage: http://www.progressivepolicy.org/author/mmandel/ Brett Swanson’s homepage: http://www.bretswanson.com/ David’s Twitter: @DavidBeckworth Michael Mandel’s Twitter: @MichaelMandel Bret Swanson’s Twitter: @JBSay Related links: “The Coming Productivity Boom: Transforming the Physical Economy with Information” by Michael Mandel and Bret Swanson http

Steven Horwitz is a professor of economics at Ball State University and a senior affiliated scholar at the Mercatus Center at George Mason University. He joins the show to discuss monetary disequilibrium (the condition when the supply and demand for money are not aligned, which leads to either inflation or deflation). David and Steve also examine Austrian Business Cycle Theory – a theory of how “malinvestment” caused by bad policy leads to an unsustainable boom and inevitable bust. Steve also explains how monetary disequilibrium led to the Great Recession and offers some solutions for minimizing business cycles in the future. David’s blog: http://macromarketmusings.blogspot.com/ Steve Horwitz’s personal website: http://myslu.stlawu.edu/~shorwitz/ Steve Horwitz’s Mercatus profile: https://www.mercatus.org/steven-horwitz David’s Twitter: @DavidBeckworth Related links: *Microfoundations and Macroeconomics: An Austrian Perspective* by Steven Horwitz https://www.amazon.com/Microfoundations-Macroeconomics-Perspecti

Matt Klein is a columnist for the Financial Times and blogger at FT Alphaville. Today, he joins the show to discuss his work on the Eurozone, optimal currency areas, and safe assets. David and Matt examine the monetary policy problems and debt burdens facing the Eurozone area and Greece, in particular. They also chat about the possibility of the United States becoming less of an optimal currency, which would make Fed policy more challenging. David’s blog: http://macromarketmusings.blogspot.com/ Matt Klein’s bio: https://ftalphaville.ft.com/meet-the-team#matthew-c-klein David’s Twitter: @DavidBeckworth Matt Klein’s Twitter: @M_C_Klein Related links: “Is the United States Becoming Less of an Optimal Currency Area?” by David Beckworth http://macromarketmusings.blogspot.com/2017/05/is-united-states-becoming-less-of.html “Will Nevada Ever Recover from the Housing Boom?” by Matt Klein https://ftalphaville.ft.com/2017/03/06/2185515/will-nevada-ever-recover-from-the-housing-bust/ “The IMF Implies Greece Should Have L

Jay Shambaugh is a professor of economics and international affairs at The George Washington University and a former member on the Council of Economic Advisers (CEA). Today, he joins the show to discuss his work on the “Macroeconomic Trilemma” (or “Impossible Trinity”): the problem that a country cannot maintain a fixed exchange rate, free movement of capital, and an independent monetary policy all at once. He also shares stories from his time at the CEA as well as thoughts on current monetary policy both for the U.S. and the Eurozone. David’s blog: http://macromarketmusings.blogspot.com/ Jay Shambaugh’s GW profile: https://www2.gwu.edu/~iiep/about/faculty/jshambaugh/ David’s Twitter: @DavidBeckworth Jay Shambaugh’s Twitter: @JayCShambaugh Related links: “The Euro’s Three Crises” by Jay C. Shambaugh https://www.brookings.edu/bpea-articles/the-euros-three-crises/ “Financial Stability, the Trilemma, and International Reserves” by Maurice Obstfeld, Jay C. Shambaugh, & Alan M. Taylor http://www.nber.org/paper

David Schleicher is an Associate Professor of Law at Yale Law School and is an expert in election law, land use, local government law, urban development, transportation, and local regulation of the sharing economy. He joins the show to discuss his new journal article, “Stuck! The Law and Economics of Residential Stability,” which argues that government regulations, such as occupational licensing and land-use laws, have led to a significant decline in inter-state mobility. Schleicher describes the negative macroeconomic implications of this trend and explains how we can reverse it. David’s blog: http://macromarketmusings.blogspot.com/ David Schleicher’s Yale profile: https://law.yale.edu/david-n-schleicher David Beckworth’s Twitter: @DavidBeckworth David Schleicher’s Twitter: @ProfSchleich Related links: “Stuck! The Law and Economics of Residential Stability” by David Schleicher https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2896309

Paul Krugman is a Nobel Laureate in economics, a columnist at *The New York Times,* and a Distinguished Professor of Economics at the Graduate Center of the City University of New York. He joins the show to discuss his work on liquidity traps, Japan’s Lost Decade, and lessons from the Great Recession. Paul also explains how Isaac Asimov’s science fiction inspired him to become an economist. David’s blog: http://macromarketmusings.blogspot.com/ Paul Krugman’s CUNY profile: https://www.gc.cuny.edu/stonecenter/Paul-Krugman Paul Krugman’s blog: https://krugman.blogs.nytimes.com/ Paul Krugman’s NYT archive: https://www.nytimes.com/column/paul-krugman David’s Twitter: @DavidBeckworth Paul Krugman’s Twitter: @paulkrugman Related links: “It’s Baaack: Japan’s Slump and the Return of the Liquidity Trap” by Kathryn M. Dominguez, Kenneth S. Rogoff, and Paul R. Krugman https://www.brookings.edu/bpea-articles/its-baaack-japans-slump-and-the-return-of-the-liquidity-trap/ "Debt, Deleveraging, and the Liquidity Trap: A Fisher

Ethan Ilzetzki is an assistant professor of economics at the London School of Economics and a research affiliate at the Centre for Economic Policy Research. He joins the show to discuss exchange rate regimes, anchor currencies, and the new Triffin dilemma. Ethan points out how the U.S. dollar is connected to a staggering 70 percent of global GDP. David and Ethan discuss what the dollar’s dominant role in the global economy means for U.S. monetary policy, both at home and abroad. David’s blog: http://macromarketmusings.blogspot.com/ Ethan Ilzetzki’s LSE profile: http://personal.lse.ac.uk/ilzetzki/index.htm/ David’s Twitter: @DavidBeckworth Ethan Ilzetzki’s Twitter: @ilzetzki Related links: “Exchange Arrangements Entering the 21st Century: Which Anchor Will Hold?” by Ethan Ilzetzki (with Carmen Reinhart and Kenneth Rogoff) http://personal.lse.ac.uk/ilzetzki/index.htm/Research/Ilzetzki&Reinhart&Rogoff.pdf “How Big (Small?) are Fiscal Multipliers?” by Ethan Ilzetzki (with Enrique G. Mendoza and Carlos A.

Daniel Griswold is a Mercatus Center Senior Research Fellow and Co-Director of the Program on the American Economy and Globalization at the Mercatus Center at George Mason University. He joins the show to discuss the theory of trade, dating back to Adam Smith, and his work on current US trade policy. Daniel and David discuss some of the misconceptions surrounding trade and why Americans should embrace free trade instead of protectionism. David’s blog: http://macromarketmusings.blogspot.com/ Daniel Griswold’s blog: https://madabouttrade.com/ David’s Twitter: @DavidBeckworth Daniel Griswold’s Twitter: @DanielGriswold Related links: “Plumbing America’s Balance of Trade” by Daniel Griswold https://www.mercatus.org/publications/american-balance-of-trade *Mad About Trade: Why Main Street America Should Embrace Globalization* by Daniel Griswold https://www.amazon.com/Mad-About-Trade-America-Globalization/dp/193530819X “The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade” by David Autor,

Josh Zumbrun is a national economics correspondent for the Wall Street Journal. David and Josh discuss what seems to be the diminished status of economists in a populist era and what role economists will play in the Trump Administration. Josh also shares his thoughts on life as an economics journalist in the digital age. David’s blog: http://macromarketmusings.blogspot.com/ Josh Zumbrun’s WSJ archive: http://topics.wsj.com/person/Z/josh-zumbrun/7972 David’s Twitter: @DavidBeckworth Josh Zumbrun’s Twitter: @JoshZumbrun Related links: “How to Restore Faith in Economics” by Noah Smith https://www.bloomberg.com/view/articles/2017-03-15/how-to-restore-faith-in-economics “Donald Trump’s Cabinet Won’t Include Chairman of CEA” by Josh Zumbrun https://www.wsj.com/articles/donald-trumps-cabinet-wont-include-chairman-of-cea-1486670755?tesla=y

In this week’s episode, Jim Bullard, the president and CEO of the Federal Reserve Bank of St. Louis, joins the show to discuss his work as a Federal Reserve executive and as a researcher in monetary policy. Bullard shares his thoughts on why inflation has been so persistently low since 2008 and whether the Fed should pursue a more symmetric inflation target. He and David also discuss the Fed’s plans for monetary policy in 2017. In Bullard’s view, the Fed should focus on reducing its balance sheet before it turns to raising rates further. (Note: this episode was recorded on April 5, 2017) Interview transcript: https://www.mercatus.org/podcasts/04172017/macro-musings-53-james-bullard-federal-reserve David’s blog: http://macromarketmusings.blogspot.com/ Jim Bullard’s Federal Reserve profile: https://www.stlouisfed.org/from-the-president David’s Twitter: @DavidBeckworth St. Louis Fed’s Twitter: @stlouisfed Related links: “Comments on the FOMC's Amendments to Its Statement on Longer-Run Goals” by James Bullard htt

Tyler Cowen is a professor of economics at George Mason University as well as the general director of the Mercatus Center at George Mason University. He joins the show to discuss his new book, *The Complacent Class: The Self-Defeating Quest for the American Dream.* Tyler argues that restlessness and willingness to take risks have been key traits throughout American history. However, in the last few decades, American society has become more risk-averse. While we may have become more comfortable with less risk-taking, this complacency has led to less innovation and dynamism in the economy. Such stasis is causing economic stagnation and other woes throughout the United States. David’s blog: http://macromarketmusings.blogspot.com/ Tyler Cowen’s blog: http://marginalrevolution.com/ David’s Twitter: @DavidBeckworth Tyler Cowen’s Twitter: @tylercowen Related links: *The Complacent Class: The Self-Defeating Quest for the American Dream* by Tyler Cowen https://www.amazon.com/Complacent-Class-Self-Defeating-Quest-Ameri

George Selgin, director of the Cato Institute’s Center for Monetary and Financial Alternatives, returns to *Macro Musings* to discuss his new proposal to reform how the Fed conducts open-market operations. He proposes abolishing the current primary dealer system and expanding the Fed’s number of counterparties. David and George also discuss the Fed’s plans for 2017 and whether it will seek to reduce its large balance sheet. David’s blog: macromarketmusings.blogspot.com/ George Selgin’s Cato archive: www.cato.org/people/george-selgin George Selgin’s Alt-M archive: https://www.alt-m.org/author/selgin/ (contains George’s monetary policy primer posts) David’s Twitter: twitter.com/DavidBeckworth George Selgin’s Twitter: twitter.com/georgeselgin Related links: *Money: Free and Unfree* by George Selgin https://www.amazon.com/Money-Free-Unfree-George-Selgin/dp/1944424296 “Reforming Last-Resort Lending: The Flexible Open-Market Alternative” by George Selgin (as part of *Prosperity Unleashed: Smarter Financial Regulati

Steve Hanke is a professor of applied economics and co-director of the Institute for Applied Economics, Global Health, and the Study of Business Enterprise at The Johns Hopkins University in Baltimore. He is also a senior fellow and director of the Troubled Currencies Project at the Cato Institute. Steve joins the show to discuss his work on the history of hyperinflations. David and Steve discuss what exactly constitutes hyperinflation as well as historical examples of hyperinflation from 1940s Hungary to present-day Venezuela. David’s blog: http://macromarketmusings.blogspot.com/ Steve Hanke’s Cato profile: https://www.cato.org/people/steve-hanke David’s Twitter: @DavidBeckworth Steve Hanke’s Twitter: @steve_hanke Related links: Venezuela Enters the Record Book: the 57th Entry in the Hanke-Krus World Hyperinflation Table (contains full list of world hyperinflations) https://object.cato.org/sites/cato.org/files/articles/hanke-sae-december-2016.pdf

Jeffrey Frankel is a professor and economist at Harvard University and the director of the Program in International Finance and Macroeconomics at the National Bureau of Economic Research (NBER). He joins the show to discuss serving on the NBER’s Business Cycle Dating Committee, which officially declares the start and end of recessions. David and Jeff also discuss the monetary history of the Plaza Accord, an international agreement in 1985 to devalue the U.S. dollar. Jeff also shares his thoughts on globalization in the past few decades and current-day challenges facing it. David’s blog: http://macromarketmusings.blogspot.com/ Jeff Frankel’s Harvard profile: https://www.hks.harvard.edu/about/faculty-staff-directory/jeffrey-frankel Jeff Frankel’s NBER publications: http://www.nber.org/authors/jeffrey_frankel David’s Twitter: @DavidBeckworth Related links: “Globalization of the Economy” by Jeffrey Frankel https://www.hks.harvard.edu/fs/jfrankel/NyeGlobWPwFigPost.pdf “Globalization and Chinese Growth: End of Tren

Jason Furman is a senior fellow at the Peterson Institute for International Economics. Previously, he served as the Chairman of the Council of Economic Advisers under President Obama. He joins the show to reflect on his time in the Obama Administration. Among other things, Jason and David discuss the efficacy of fiscal policy, the fiscal multiplier, and whether the platinum coin was ever seriously considered. They also discuss the problem of declining male labor force participation, its causes, and possible solutions. David’s blog: http://macromarketmusings.blogspot.com/ Jason Furman’s PIIE profile: https://piie.com/experts/senior-research-staff/jason-furman David’s Twitter: @davidbeckworth Jason Furman’s Twitter: @jasonfurman Related links: “The New View of Fiscal Policy and Its Application” by Jason Furman http://voxeu.org/article/new-view-fiscal-policy-and-its-application “The Long-Term Decline in US Prime-Age Male Labor Force Participation” by Jason Furman http://voxeu.org/article/long-term-decline-us-pri

Larry White is a professor of economics at George Mason University and has written widely on monetary theory, free banking, and the Austrian School of Economics. Today, he joins the show to discuss the recent demonetization efforts in India to crack down on corruption. White argues that India’s efforts to end the circulation of large notes and begin the circulation of new notes is having pernicious effects on the Indian population. He and David also discuss Austrian Business Cycle Theory, how this theory was developed by great economists such as Ludwig von Mises, and how the theory may have played a role in the lead up to the Great Recession. David’s blog: http://macromarketmusings.blogspot.com/ Larry White’s GMU profile: http://economics.gmu.edu/people/lwhite11 Larry White’s Alt-M archive: https://www.alt-m.org/author/white/ David’s Twitter: @davidbeckworth Larry White’s Twitter: @lawrencehwhite1 Related links: “India’s Currency Cancellation: Seigniorage and Cantillon Effects” by Larry White and Shruti Rajag

Tim Duy is a professor of economics at the University of Oregon and a widely read “Fed Watcher.” Today, he joins the show to discuss writing on the Federal Reserve and how to interpret statements from Fed officials. In particular, Tim stresses the importance of the Fed Chair’s post-FOMC meeting press conferences. He also warns against taking too much stock in FOMC minutes. David and Tim also discuss the proper role of the Fed’s balance sheet in stabilizing monetary policy. David’s blog: http://macromarketmusings.blogspot.com/ Tim Duy’s homepage: http://pages.uoregon.edu/duy/ Tim’s “Fed Watch” blog: http://economistsview.typepad.com/timduy/ Tim’s Bloomberg archive: https://www.bloomberg.com/view/contributors/AC6KX2KfHjM/timothy-a-duy David’s Twtter: @davidbeckworth Tim’s Twitter: @TimDuy

Hester Peirce is a Senior Research Fellow at the Mercatus Center at George Mason University and director of Mercatus’ Financial Markets Working Group. She joins the show to discuss the new Mercatus book, *Reframing Financial Regulation: Enhancing Stability and Protecting Consumers*, which she coedited. The book examines the problems with the United States’ current financial regulation regime (including the Dodd-Frank Act) and offers alternative policies that rely less on a centralized regulation and more on market discipline. David’s blog: http://macromarketmusings.blogspot.com/ Hester’s Mercatus profile: https://www.mercatus.org/hester-peirce David’s Twitter: @davidbeckworth Hester’s Twitter: @HesterPeirce *Reframing Financial Regulation: Enhancing Stability and Protecting Consumers* edited by Hester Peirce and Benjamin Klutsey https://www.mercatus.org/publications/reframing-financial-regulation