Found 79 article(s) for author 'Martin Feldstein'

The Fed is wrong to put off the return to normality

The Fed is wrong to put off the return to normality. Martin Feldstein, September 22, 2013, Opinion. “The US Federal Reserve’s decision last week to delay the start of its so-called “tapering” has confused investors about the reliability of its forward guidance. It has also created a trap that will make it difficult to start the tapering programme in the future unless the Fed changes its basic approach. More specifically, Ben Bernanke, the Fed chair, explained that the Federal Open Market Committee (FOMC) had decided not to reduce its pace of bond-buying because current economic conditions were not as favourable as the FOMC members had expected in June Link verified April 3, 2014

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How to Create a Real Economic Stimulus

How to Create a Real Economic Stimulus. Martin Feldstein, September 16, 2013, Opinion. “Earlier this year, former U.S. Treasury Secretary Larry Summers expressed doubts about the Federal Reserve’s quantitative easing policy of buying $85 billion a month of government bonds and other long-term assets. His skepticism antagonized some Fed insiders and liberal Democrats, who recently opposed his consideration by President Obama as the next Fed chairman. When Mr. Summers on Sunday withdrew his candidacy for the chairman’s job, there was one immediate benefit…” Link

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US Interest Rates Will Continue to Rise

US Interest Rates Will Continue to Rise. Martin Feldstein, August 28, 2013, Opinion. “Six months ago, I wrote that long-term interest rates in the United States would rise, causing bond prices to fall by so much that an investor who owned ten-year Treasury bonds would lose more from the decline in the value of the bond than he would gain from the difference between the bonds’ interest rate and the interest rates on short-term money funds or bank deposits. That warning has already proved to be correct. The interest rate on ten-year Treasury bonds has risen almost a full percentage point since February, to 2.72%, implying a loss of nearly 10% in the price of the bond…” Link verified April 3, 2014

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Decoding Bernanke

Decoding Bernanke. Martin Feldstein, July 29, 2013, Opinion. “Federal Reserve Chairman Ben Bernanke has been struggling to deliver a clear message about the future of Fed policy ever since his May 22 testimony to the US Congress. Indeed, two months later, financial-market participants remain confused about what his message means for the direction of US monetary policy and market interest rates. Bernanke’s formal statements about the Fed’s two unconventional policies have been clear. First, the Fed is trying to give relatively specific guidance about the future path of the federal funds rate (the overnight rate at which commercial banks lend to each other)…” Link verified March 28, 2014

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Martin Feldstein interviews Paul Volcker about Monetary Policy

Martin Feldstein interviews Paul Volcker about Monetary Policy. Martin Feldstein, July 10, 2013, Video. “Martin Feldstein interviewed Paul Volcker on July 10, 2013 regarding The First 100 Years of the Federal Reserve – The Policy Record, Lessons Learned, and Prospects for the Future. Martin Feldstein is George F. Baker Professor of Economics, Harvard University, and President Emeritus, National Bureau of Economic Research, both in Cambridge, Massachusetts…” Link verified April 3, 2014

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An end to austerity will not boost Europe

An end to austerity will not boost Europe. Martin Feldstein, July 9, 2013, Opinion. “The eurozone periphery is on a risky path to end fiscal austerity and accept larger budget deficits. Portugal is the most recent dramatic shift in that direction; Italy, Spain and even France are also abandoning plans to cut spending and raise taxes. This move away from budget discipline reflects a combination of popular political pressure, more accommodating bond markets and encouragement from the International Monetary Fund. But ending fiscal austerity is not a strategy for achieving growth. It will reduce downward pressure on aggregate spending but will not lift growth and employment…” Link verified March 28, 2014

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The Fed Should Start to ‘Taper’ Now

The Fed Should Start to ‘Taper’ Now. Martin Feldstein, July 2, 2013, Opinion. “The Federal Reserve should begin now to end its program of long-term asset purchases. It should not wait for the improved labor market that it predicts will come later this year, an improvement that is unlikely to occur. Instead, the Fed should emphasize that the pace of quantitative easing must adjust to the likely effectiveness of the program itself, and to the costs and risks of continuing to buy large quantities of bonds. Although the economy is weak, experience shows that further bond-buying will have little effect on economic growth and employment. Meanwhile, low interest rates are generating excessive risk-taking…” Link verified April 3, 2014

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Why Is US Inflation So Low?

Why Is US Inflation So Low?. Martin Feldstein, June 28, 2013, Opinion. “Why has quantitative easing coexisted with price stability in the United States? Or, as I often hear, “Why has the Federal Reserve’s printing of so much money not caused higher inflation?” Inflation has certainly been very low. During the past five years, the consumer price index has increased at an annual rate of just 1.5%. The Fed’s preferred measure of inflation – the price index for personal consumption expenditures, excluding food and energy – also rose at a rate of just 1.5%. By contrast, the Fed’s purchases of long-term bonds during this period has been unprecedentedly large…”  Link verified April 3, 2014

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America’s Misplaced Deficit Complacency

America’s Misplaced Deficit Complacency. Martin Feldstein, May 30, 2013, Opinion. “The United States still faces a dangerous fiscal deficit, but one might not know it from the complacency that dominates budget discussions in Washington. Regarded as an urgent problem until recently, the federal deficit is now being placed on the back burner of American politics. The shift in thinking was triggered by the revised deficit forecasts recently published by the Congressional Budget Office, the independent technical agency responsible for advising Congress on budget issues. According to the CBO’s report, the US fiscal deficit will decline from 7% of GDP in 2012 to 4% in 2013. This reduction reflects the cuts in government spending…” Link 

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The Federal Reserve’s Policy Dead End

The Federal Reserve’s Policy Dead End. Martin Feldstein, May 9, 2013, Opinion. “The Federal Reserve recently announced that it will increase or decrease the size of its monthly bond-buying program in response to changing economic conditions. This amounts to a policy of fine-tuning its quantitative-easing program, a puzzling strategy since the evidence suggests that the program has done little to raise economic growth while saddling the Fed with an enormous balance sheet. Quantitative easing, or what the Fed prefers to call long-term asset purchases, is supposed to stimulate the economy by increasing share prices, leading to higher household wealth and therefore to increased consumer spending…” Link verified April 3, 2014

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