When an economy or area is jostled from monetary equilibrium, underlying “problems” show up. In this case, what became evident from lack of “integration” was the current account “imbalances” between the “core” and “periphery”.Using Germany and Spain as “representative agents” for the “core” and “periphery”, respectively, we get a good handle on the lack of integration.
Articles by Marcus Nunes
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If Jerome Powell is “sold” on the idea that he has to restrain an economy that is “too vibrant”, the outcome will be “disaster”.
This was heard at Jackson Hole: “The cyclical recovery was gathering both pace and geographical breadth, thanks in part to the stimulus efforts of central bankers, the European Central Bank president said, adding that even if inflation remained low, the euro area economy was “gaining ground”. The Fed and the ECB feel they have done all they could. What a cop-out!
Not really. The Fed hid it and forgot where it put it! They has raised rates three more times since. Inflation hasn´t gone up, as the neofisherians would have us believe, but there´s been no recession either.
After building-up for several years, the view that the Fed should increase its inflation target has “boomed”. The July 1996 FOMC Meeting witnessed an extended discussion of inflation targeting. Interestingly it was Janet Yellen and Laurence Meyer´s first FOMC Meeting. Interesting because they are the two strong Phillips Curve adepts!
Federal Reserve Chair Janet Yellen said the primary reason for raising interest rates in March was a simple one: the central bank is confident in a steadily improving economy. The economy, however, has actually been deteriorating somewhat for Fed’s rate hikes.
The Fed waited more than seven years to begin the rate hiking process. Maybe she´s worried about who Trump is going to put on Board and if she´ll be on Board next year. However, trying to go faster will probably make her lose the status of “most successful fed Chairperson” ever she´s beginning to amass.
Why do problems emanate in the South, even if you discount Greece (Deep South)? For the purposes of this post, South comprises France, Italy, Spain and Portugal, respectively the second, third and fourth largest Eurozone economies. North considers Germany (the largest EZ economy), Belgium, Netherlands and Austria.
In the US, many, like Blanchard and Krugman, have for long advocated a higher inflation target as a means of getting the economy ‘moving’.
Marcus Nunes | Ms. Yellen also said that she did not think the Fed, by raising rates in December, had contributed significantly to the latest round of economic problems. When Senator Dean Heller, Republican of Nevada, asked Ms. Yellen whether the Fed had caused stock prices to fall, she responded, “I don’t think it’s mainly our policy.”