By Kumiharu Shigehara
Japan’s economic expansion stumbled by late 2007, and in the context of the global economic crisis, it has been trapped in the deepest recession of the post-war era. Initially, the impact of the global crisis on the Japanese economy was expected to be limited because Japanese banks and other financial institutions were relatively insulated from financial turmoil. However, between the third quarter of 2008 and the first quarter of this year, Japan’s exports fell at an annual rate of some 55 per cent in volume terms, the sharpest among OECD countries and double the area’s average rate of decline. Continue reading "Japan needs more aggression in warding off deflation"
October 26th, 2009 4:31pm in Central banks, Currencies, IMF, Monetary policy | Permalink | Comment
This international comparison shows the effects of quantitative easing and how far ahead Japan is.
October 22nd, 2009 12:44pm in Central banks, Charts | Permalink | Comment
By Roger E. A. Farmer
According to a widely-held consensus view, the world is slowly emerging from the Great Recession of 2008. Growth in China is projected to top 8 per cent in 2009. Australia raised the interest rate on the Australian dollar last week and the US and UK economies are showing signs that unemployment growth has slowed even though the unemployment rates in both countries are very high. Sometime soon, perhaps in the spring of 2010, perhaps earlier, the Fed, the European Central Bank, and the Bank of England are likely to respond to the perceived global recovery by reducing the sizes of their balance sheets and raising interest rates on overnight loans. Continue reading "Don’t give up on quantitative easing: We can have our cake and eat it too"
October 16th, 2009 12:37pm in Capitalism, Central banks, Crisis, Economists, Inflation, Monetary policy | Permalink | Comment
By Andrew Sheng and Michael Pomerleano
The national authorities and the international community should be commended for the speed of action taken to stop the spread of the financial crisis. To protect the financial system from the deflation in asset bubbles, the public sector has essentially guaranteed all deposits, rescued systemically important institutions, made large liquidity injections and brought interest rates to zero or near zero under a zero interest rate policy. Almost all systemically important central banks entered into ZIRP under emergency conditions at the same time.
But the polices adopted to combat the crisis are creating their own problems. In the medium term, the treatment may be as expensive as the crisis.
Continue reading "Zero interest rate policy: Treatment may be as expensive as the crisis"
October 15th, 2009 11:22am in Capitalism, Central banks, Crisis, Fiscal policy, Government guarantees, Keynesianism, Monetary policy | Permalink | Comment
I like and admire Lord Turner, chairman of the UK’s Financial Services Authority. He is more than an acute analyst. He is also brave. He showed that in his struggle with Gordon Brown, then chancellor of the exchequer, over plans for pension reform published in 2005. He is showing that again today in the lively debate he has initiated on the future of financial regulation. Continue reading "Turner is asking the right questions on finance"
September 11th, 2009 3:07am in Central banks, Monetary policy | Permalink | Comment
By Masahiro Kawai and Michael Pomerleano
In a previous article in the Economists’ Forum, we expressed skepticism about the capacity of the Financial Stability Board to implement sound international financial stability regulatory architecture. We concluded that the prospects were more promising on the domestic front; this led to a discussion on creating a financial stability regulator at the national level.
The Obama administration has proposed that the Federal Reserve should become the overseer of financial stability in the US. The central bank would gain power to monitor risks across the financial system and sweeping authority to examine any firm that could threaten financial stability. The nation’s biggest and most interconnected firms would be subject to heightened oversight. Continue reading "Bolstering financial stability regulation"
August 28th, 2009 2:52pm in Central banks, Crisis, Economists, Federal Reserve, Fiscal policy, Monetary policy, Regulation | Permalink | Comment
by Kenneth Rogoff
When in doubt, bail it out,” is the policy mantra 11 months after the September 2008 collapse of Lehman Brothers. With the global economy tentatively emerging from recession, and investors salivating over the remaining banks’ apparent return to profitability, some are beginning to ask: “Did we really need to suffer so much?” Continue reading "Why we need to regulate the banks sooner, not later"
August 19th, 2009 1:26am in Aid, Banks, Central banks, Credit squeeze, Crisis | Permalink | Comment
By Ronald McKinnon
The global credit crunch which began in 2007 but became acute in 2008, originated from the collapse in the bubble in US house prices and, to a lesser extent, in European ones.
Unsurprisingly, the declining home values made people feel poorer, so consumption spending fell. This fall in aggregate demand in the US and Europe reduced demand for imports and caused a parallel slump in the rest of the world, including in emerging markets. Continue reading "Liquidity traps and the credit crunch"
August 13th, 2009 11:25am in Banks, Central banks, Credit squeeze, Federal Reserve, Keynesianism, TARP | Permalink | Comment
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