Research
TALKS AND COMMENTS
Essays, slides, videos, and other materials based on talks, speeches, comments, etc.
April 25 2024. What is the basic theory of inflation under interest rate targets? Do higher interest rates lower inflation, and if so, how? The Paper> Slides>
Fiscal Narratives for US Inflation. Jan 28 2024. Comments on Chris Sims “Origins of US Inflation Since 1950” at the 2024 AEA meetings. It is mostly a distillation previous writing and talks, trying to tell the story of US inflation episodes from a fiscal theory point of view. Slides here.
Comments on “Downward Nominal Rigidities and Bond Premia” by François Gourio and Phuong Ngo, at the Fall 2023 NBER Asset Pricing meeting. (November 2023). My slides are here. A YouTube video of the conference is here, I start at 7:35. A bit of term premium, and a longer complaint about the continued use of NK models with known pathologies.
May 23 2022. An essay, underlying my presentation at the Hoover Monetary Policy Conference May 6 20-22. There is a model by which the Fed is not behind the curve. Is it right? Stopping inflation will require coordinated fiscal and monetary policy.
April 22 2022. The covid inflation was a classic fiscal helicopter drop. It was not a monetary drop. Click on the title for more details.
The Dog and the Straw Man: Response to “Dividend Growth Does Not Help Predict Returns Compared To Likelihood-Based Tests: An Anatomy of the Dog”. Click title for longer summary
A talk given at the UCSD Economics roundtable June 11 2021. Inflation, Fed policy, fiscal pressures, and a quick tour of the Fed’s entrenchment of bailouts, and forays to climate change and social justice. Youtube video here, slides here, blog post with a bit more commentary here.
February 2021. r<g is an essay on why we still have to repay debts despite r<g. Based on comments on Ricdardo Reis’ r<g paper spring 2021 NBER EFG. Click the title for longer description. Read the essay>
Jan 11 2021. A debate with Olivier Blanchard, courtesy of IGIER at Bocconi. r<g is fun, but it is irrelevant to US fiscal issues. r<g of 1% of GDP does not finance perpetual 5% of GDP deficits, every decade 20% of GDP crisis borrowing, plus big new spending plans. And then unfunded entitlements kick in. The paper in pdf form, on my blog. Slides. Video of the event.
This is a talk I gave at the European Central Bank (zoom) Oct 20 2020. I survey the broad challenges facing the ECB and other central banks in a policy review, from interest rates and inflation, to financial regulation, to a list of risks to worry about, and closing thoughts on the wisdom of central banks embarking on climate change policy. pdf here. conference website with other papers and video.
This was the 2020 Homer Jones Memorial Lecture at the Federal Reserve Bank of St. Louis. Video of the lecture and more here. The article, (html) (pdf) (local pdf) in the Federal Reserve Bank of St. Louis Review, Second Quarter 2020, 102(2), pp. 99-119. Many thanks to the St. Louis Fed, and gracious host Jim Bullard.
Comments for the session "Monetary Policy, Conventional and Unconventional" at the Spring 2018 Nobel Symposium on Money and Banking. A lightning summary of recent papers including "Fiscal theory of monetary policy" "Michelson-Morley" and "New Keynesian Liquidity Trap." Lots of pictures. Fun. Slides. Video of the presentation. Link to the whole conference including video and slides for all the presentations.
April 22 2017 Comments on "Inflating away the public debt? An empirical assessment" by Jens Hilscher, Alon Aviv and Ricardo Reis. A little inflation will not likely help our debt problems. An interest rate rise could make matters much worse, and precipitate a debt crisis, which would cause a lot of inflation. Slides
By Pierre-Olivier Gourinchas. April 2017. In Rules for International Monetary Stability edited by Michael D. Bordo and John B. Taylor, p. 186-195, Stanford: Hoover Institution Press. (The link includes the final paper and my comment.) The comments, presented at the conference, "International Monetary Stability: Past, Present and Future," Hoover Institution, May 5 2016, refer also to the original paper 'Global Imbalances and Currency Wars at the ZLB,' by Ricardo J. Caballero, Emmanuel Farhi, and Pierre-Olivier Gourinchas. The papers model "Global imbalances," "savings gluts," "safe asset shortages," and so forth, with a dramatic "tipping point" at the zero bound. At the bound "inability to produce safe assets" in one country spills over to output gaps at another one. I outline a different world view and contrast the two worlds.
Comments on "A Behavioral New-Keynesian Model" by Xavier Gabaix. Comments presented at the October 21 2016 NBER EFG meeting. The model is really important. It is an alternative to active Taylor rules in NK models, solving zero bound and other problems. But it puts a lot of irrationality deeply at the heart of monetary economics. Slides
Comments on "Random Risk Aversion and Liquidity: a Model of Asset Pricing and Trade Volumes" by Fernando Alvarez and Andy Atkeson. Comments presented at the Conference in Honor of Robert E. Lucas Jr., Becker-Friedman Institute, October 7 2016. Andy and Fernando have a nice paper, which I pretty much ignored and summarized some thoughts on the big puzzle of volume instead.
Slides for talk at the European Financial Association, August 2016. This turned in to the paper by the same name above. It's an evolution of the similar slides for my talk given at the Columbia-New York Fed conference honoring Michael Woodford May 18-19 2016. The ZLB is a deeply revealing moment for monetary economics, like Michelson-Morley's famous experiment. Nothing happened. Many theories say big things should have happened, and those theories are wrong. (Well, unless you add epicycles, ether drag, or other ugly complications. Hence Occam's razor.) In the new version I incorporate Sims' insight for how to get a temporary negative inflation out of a rate rise. In the same vein slides for a 1.5 hour MBA class covering all of monetary economics from Friedman, Sargent-Wallace, Taylor, Woodford, and FTPL.
Talk given at the Minneapolis Federal Reserve's "Ending too big to fail" symposium, May 16 2016.
April 1, 2016. Slides for a talk at the Next Steps for the Fiscal Theory of the Price Level conference at the Becker-Friedman Institute, April 1 2016. The Fiscal Theory is that the real value of nominal debt equals the present value of primary surpluses. The agenda is making this fact come alive in the analysis of history, of data, of policy, and of better monetary and fiscal regimes. To that end, I argue we've paid to much attention to surpluses, and not enough to discount rates or to debt and monetary policy. I show how we need discount rates to understand the cyclical variation of inflation, and how monetary policy is quite strong in the fiscal theory, by the ability to control nominal interest rates and thus expected inflation.
Nov 5 2015. Comments on Robust Bond Risk Premia by Michael Bauer and Jim Hamilton, at the 5th Conference on Fixed Income Markets, San Francisco Federal Reserve, Nov 5 2015. I look at the evidence whether macro variables help to forecast bond returns. It turns out a trend does even better, pushing the R2 up to 62 percent! That finding suggests that specification issues rather than distribution theory are the central problems. I don't find that the Bauer-Hamilton effect size distortion is big. I document measurement errors in the data, which are a good target for econometric help. I opine we need to spend less attention on one asset at at time forecasting and more attention on the factor structure of expected returns across assets, and how that structure lines up with covariances of returns with shocks. There is also a little example of perfect non-spanning in a term structure model; bond yields have an exact one factor model, but a non-spanned factor drives expected returns. Programs and data (zip)
By Paul Tucker. In John H. Cochrane and John B. Taylor, Eds., Central Bank Governance and Oversight Reform, Hoover Institution Press May 2016, p. 31-36. (Chapter pdfs available here) Comments presented at the Hoover conference by the same name, May 21, 2015. Tucker's paper here. Tucker wisely advocates rules for mop ups, lender of last resort, bailouts, etc. I agree, but wouldn't lots more equity so you don't have to mop up be simpler?
Comments on Gary Hansen and Lee Ohanian, "Neoclassical Models of Aggregate Economies" at the Conference on the Handbook of Macroeconomics, Volume 2, Hoover Institution, April 11 2015.
Comments on Aytek Malkhozov, Philippe Mueller, Andrea Vedolin, and Gyuri Venter, "Mortgage Risk and the Yield Curve," slides presented at the NBER AP meeting, July 2014.
Comments on Gauti Eggertsson and Neil Mehrotra, "A Model of Secular Stagnation," slides presented at the NBER EFG meeting, July 2014.
November 12 2012 How the US Treasury can both lengthen and shorten its debt at the same time, to buy insurance against interest rate rises and provide "liquidity." A short paper diguised as comments on Greenwood, Hanson, and Stein “A Comparative Advantage Approach to Government Debt Maturity” at the Second Annual Roundtable on Treasury Markets and Debt Management , US Treasury, Nov. 15 2012
Comments on "Volatility, the Macroeconomy and Asset Prices, by Ravi Bansal, Dana Kiku, Ivan Shaliastovich, and Amir Yaron, and “An Intertemporal CAPM with Stochastic Volatility” by John Y. Campbell, Stefano Giglio, Christopher Polk, and Robert Turley. Also slides. April 13 2012 Comments presented at the spring NBER asset pricing meeting. I took the opportunity to offer a sceptical apparisal of long-run risks, and whether stochastic volatilty really works as a state variable, especially in the long run.
The Fiscal Theory of the Price Level and its Implications for Current Policy in the United States and Europe November 19, 2011 This is the text of my presentation at the concluding panel of the conference, “Fiscal Policy under Fiscal Imbalance,†hosted by the Becker-Friedman Institute and Federal Reserve Bank of Chicago.
March 3 2011 Comments on Jim Hamilton and Jing Wu, 2011, "The Effectiveness of Alternative Monetary Policy Tools in a Zero Lower Bound Environment", at the spring NBER Monetary Economics meeting. Slides. (The Op-ed section contains several op-eds and blog posts on qe2.)
(Also web page on the event) Lecture given at NOVA school of business and economics in Lisbon, Portugal, 2010. Thinking through fiscal and monetary policy, along the lines later written up in Inflation and Debt and Understanding fiscal and monetary policy in the great recession.
Jan 13 2022. Review of Finance 2021 This is an essay on portfolios, based on a keynote talk at the NBER conference, ``New Developments in Long-Term Asset Management” Jan 21 2021. Read the paper. Slides for the talk