This US survey examines: (a) Giving the President more direct influence over monetary policy would lead to substantially worse monetary policy decisions; (b) Imposing tariffs results in a substantial portion of the tariffs being borne by consumers of the country that enacts the tariffs, through price increases; (c) There is little empirical evidence that price gouging is causing high grocery prices; (d) Widespread use of price controls creates substantial economic distortions
Keyword: Federal Reserve
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This Finance survey examines (a) The Federal Reserve has begun quantitative tightening (QT) to reduce the size of its balance sheet. Fed holdings of Treasury securities have declined by $800 billion relative to the March 2020 peak. The Fed currently holds $4.9 trillion of Treasury securities, significantly larger than the $2.5 trillion holdings prior to the Covid pandemic. A reduction in Fed holdings of Treasury securities measurably increases the interest rate on long-term U.S. Treasury bonds (b) A reduction in Fed holdings of Treasury securities measurably increases volatility in the Treasury market
This Finance survey examines: (a) September 2023 was the 25th anniversary of the collapse of Long-Term Capital Management (LTCM). In response to LTCM's troubles, the Federal Reserve orchestrated a multi-billion dollar rescue package by a consortium of banks and it cut the Federal funds rate target by 75 basis points within six weeks. The hedge fund sector's contribution to systemic risk is substantially lower today than at the time of LTCM; (b) Financial market participants' expectation that the Fed will aggressively ease monetary policy in response to financial market dislocations is a substantial source of financial instability.
With consumer prices rising at the fastest pace for three decades, we invited our US panel to express their views on the risks of prolonged higher inflation as a result of the current stance of fiscal and monetary policy, as well as the likely impact of an easing of supply bottlenecks. We asked the experts whether they agreed or disagreed with the following statements, and, if so, how strongly and with what degree of confidence:
This week's European Economic Experts Panel statements:
A) The current combination of US fiscal and monetary policy poses a serious risk of prolonged higher inflation.
B) Current EU and national fiscal policy plans are likely to leave European output below potential a year from now.
Amid fierce public debates about the size of the Biden administration’s coronavirus protection and stimulus package, we invited our US panel to express their views on the likelihood of the economy ‘overheating’ as a result of the current stance of fiscal and monetary policy. We asked the experts whether they agreed or disagreed with the following statement, and, if so, how strongly and with what degree of confidence:
This week's US Economic Experts Panel statement:
The Fed's revised strategy to focus on employment shortfalls and a more flexible interpretation of the inflation target will make little practical difference to monetary policy outcomes over the next decade.
Recent nominations to join the board of governors of the Federal Reserve have raised concerns about political threats to the independence of monetary policy-making. The Economist has explained the dangers of weakened central banks, not only in the United States but also elsewhere in the world. And economists and economic journalists have questioned the economic ideas of President Trump’s latest Fed picks, both of whom have now withdrawn their names.
This week's IGM Economic Experts Panel statements:
A) The concept of “maximum sustainable employment” is well defined enough to be used beneficially in economic policymaking.
B) Right now the US economy is operating below maximum sustainable employment.
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