"The degree of central bank independence varies considerably across countries. Several authors including Bade and Parkin (1982), Alesina (1988,1989) and Grilli, Masciandaro, and Tabellini (1991) found that more independent central banks are associated with lower levels of inflation. This note investigates whether one can find a correlation between central bank independence and the level and […]

"Actions speak louder than words." "Talk is cheap." "Speak softly and carry a big stick." These are common aphorisms which have been used historically to admonish those with loquacious tendencies to pipe down. They are words of wisdom-and something our central bankers should think about long and hard. The release of the minutes yesterday confirms […]

Throughout US economic history there have been many "Great" events - The Great Depression of the 30s; The Great Inflation of the 70s; The Great Moderation of the mid 80s to mid 00s; and of course The Great Recession of the late 00s. Now we can add another "Great" to the list - The Great […]

The jobs data was soft. - Payrolls missed by 23k and there were 26k of revisions lower to past months - so a 50k miss - Hours worked was softer - Average hourly earnings was MUCH softer - The U-rate did fall to 7.4, but on a lower participation rate (by 0.1) The September tapering […]

Yesterday's Fed statement was dovish. First, growth expectations were implicitly lowered by the stealth use of the word "modest" instead of "moderate". Second, the increased risks of disinflation were highlighted via the insertion of a new statement suggesting - "the Committee recognizes that inflation persistently below it 2 percent objective could pose risks to economic […]

The last 2 months have been tough for fixed income investors - especially levered ones. QE front runners, who followed our beloved colonel down the road to recovery by holding excess Agency MBS and long term USTs, were just given the "PFC Santiago" treatment. It was a stark reminder to all investors that the end […]

First of all, hats off to Paul Krugman. Anyone who can successfully weave "The Chewbacca Defense" from South Park episode 27 into a macroeconomic commentary is certainly worthy of the title Nobel Laureate. Bravo Paul, your recent missive - http://krugman.blogs.nytimes.com/2013/07/12/the-monetary-debate-enter-chewbacca/ - was pure genius! It’s proof that the best economists don't need to be experts […]

QE is working VERY well. Jobs are being generated; consumer and business sentiment are back above pre-crisis levels; home prices are rising at double digit annualized rates; and risk-asset prices are at record highs. Much to the dismay of the haters and the doomers, the medicine has been effective. And importantly, the two most popular […]

Back in the early ‘70s, as the oil price shock began to hit hard, speed limits in the US were cut to 55mph. The government, in an attempt to limit fuel consumption, came up with fancy slogans like "Fifty is Thrifty" and "Speed Kills" in order to justify the lower limits. But interestingly, to this […]

We have been happily living on QE transfusions for the better part of 4 years. These pain killers have made the healing from our crisis not just tolerable, but actually quite enjoyable (at least for those that sipped the cocktail). That said, the drink has many side effects, and last week the FOMC decided to […]