Sunday, December 21, 2008

Interesting Picks

The week in pictures from Econompicdata.

Chart of the day: Quantitative easing in Japan versus the US.

Tim Duy on the Fed's recent statement.

Menzie Chinn looks at the relationship between monetary policy and the exchange rate and money multipliers when monetary policy is not what it used to be anymore.

While David Beckworth summarizes the essence of both and Tyler Cowen discusses a particular point of the former, Steve Waldman and James Hamilton have excellent pieces on the Fed's everly expanding balance sheet- both highly recommended (read the Hamilton piece first).

Daniel Gros argues for transfers to the private sector rather than infrastructure investments, adding that tax cuts will be most effective in countries with net-borrower households.

Rebecca Wilder shows a glimmer of hope that Fed is working in corporate spreads, money supply and mortgage rates.

Casey Mulligan highlights that the current recession decouples from earlier ones that we have not yet seen negative qoq productivity growth. Is this something to cheer for, or does it just hint that the worst is yet to come?

Yves Smith argues that by buying almost any junk assets, the Fed, in addition to crowding out private buyers, is sinking more and more into the quicksand.

The Big Picture guest column looks at the "was there a financial crisis" argument. While the arguments will not be new to those that have followed the debate, I particularly liked the chronological comparison of the Beige books.

Once again Brad Setser on the central bank flight to safety.

There is flight to quality going on in the US market as well, here's Casey Mulligan's take on whether it is cause of effect.

A Cleveland Fed note offers some hope based on the relationship between the yield curve and GDP. I am not so optimistic given the three-month rate has not had more room to go for some time, so maybe we shouldn't read much into the recent flattening.

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