tag:blogger.com,1999:blog-7439628176985419293.post4485177838841657291..comments2023-11-02T08:28:40.590-04:00Comments on Twenty-Cent Paradigms: Glasnost!Bill Chttp://www.blogger.com/profile/01081319025032071808noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-7439628176985419293.post-22290235943177535372011-03-28T17:03:57.680-04:002011-03-28T17:03:57.680-04:00Thanks for the kind words!Thanks for the kind words!Bill Chttps://www.blogger.com/profile/01081319025032071808noreply@blogger.comtag:blogger.com,1999:blog-7439628176985419293.post-42240709730063214852011-03-25T06:31:04.534-04:002011-03-25T06:31:04.534-04:00Transparency. It sounds so good. But when you look...Transparency. It sounds so good. But when you look at it, there is nothing there.<br /><br />You offer insights I would never think of, and you explain things in a way that I can understand. Thanks.The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-7439628176985419293.post-64066189249011445352011-03-25T00:56:51.518-04:002011-03-25T00:56:51.518-04:00Art,
I'm certainly not trying to suggest this...Art,<br /><br />I'm certainly not trying to suggest this is the solution to all our problems (or that economists know what that would be - economics would be boring if we did!). The short-term practical significance is probably quite small, but its a big symbolic change.<br /><br />A couple of longer-run impacts:<br />(1) By giving him an opportunity to "spin" the FOMC announcements, I think this increases Bernanke's power relative to the committee, This goes against the general trend of the Bernanke regime of increasing the relative importance of the committee relative to the chairman because he has encouraged more debate and been more tolerant of dissent than his predecessor (perhaps because he feels more secure because he has good academic credentials??). Anyhow, I like Bernanke, so I think its a good thing.<br /><br />(2) I'm slightly worried about the possible impact on the practical independence of the Fed. If the Fed chairman comes to be seen as just another DC "talking head" perhaps the respect (awe?) for the Fed will be diminished. On the other hand, maybe the esteem of the Fed will be increased if it better explains its policies. Definitely makes the Chairman's personal communication skill more important!<br /><br />As for the general value of following academic influence, well, I'm biased. But I must confess that I tell my students that the Bank of England as an exemplar of following academic ideas - at least since the 1997 act, which gave it formal independence, a legal mandate for price stability and inflation targeting. Additionally, governor King's press conferences represent a much higher degree of "transparancy" than we've gotten from the Fed (until today!). But the Bank of England isn't looking so good now, as it keeps missing its inflation target (which must make those press conferences awkward!).Bill Chttps://www.blogger.com/profile/01081319025032071808noreply@blogger.comtag:blogger.com,1999:blog-7439628176985419293.post-24121091228764798182011-03-24T18:42:25.425-04:002011-03-24T18:42:25.425-04:00That's all very nice, Bill. But it's not l...That's all very nice, Bill. But it's not like having a solution to the economic problem, is it?<br /><br />Don't get me wrong. I have far more respect for the economic prowess of the Fed than I do for the economic prowess of Congress. I think the Fed is left to pick up the pieces after Congress does what it thinks best. (I'm not talking about the level of spending. I'm talking about the skewing of economic forces.)<br /><br />You write: "...modern macroeconomic models assign important roles to expectations, information and credibility..."<br /><br />Those would be the same models that could not foresee the financial crisis?<br /><br />Art<br />p.s. You have some interesting links and some interesting posts. I don't mean to be rude; I mean to be interesting, too. I will rely on your judgment in these matters. If you delete me, I'll get the hint :)The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.com