Has income concentration soared in the United States in recent decades? To ask the question is to sound like some sort of inequality truther in today’s post-Occupy world. Many believe the evidence leaves no doubt that income concentration has increased dramatically. Thomas Piketty devotes most of Part Three of his celebrated Capital in the Twenty-First Century to an examination of the inequality trendlines he and others have produced over the past fifteen years.
This week, April 23-30, is “High Road Restaurant Week” in New York City. If you are unfamiliar with it, it is probably because most people cannot afford to regularly eat $20 hamburgers at the expensive restaurants designated as “high road.” Read more...
Wednesday, April 23, 2014
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Friday, April 18, 2014
Thursday, April 17, 2014
This paper was presented April 13, 2014 at the International Monetary Fund’s Spring 2014 Meetings, in the session entitled “Can or Should Central Banks Remain Fully Independent Despite a Wider Mandate and Considerable Fiscal Pressure?”
Over the first 100 years of Federal Reserve System history, the United States enjoyed both price stability and the absence of banking crises in only about a quarter of those years. Allan Meltzer’s (2003, 2009, 2010) three volume history of the Fed (and the voluminous literature on Fed history published before and since) document that two main influences explain persistent Fed failure: politicization of Fed decisions (especially to elicit Fed assistance in accomplishing short-term fiscal or electoral objectives of the Administration), and model misspecification (reflecting the limits of Fed knowledge about the economy).
The Fed has achieved both of its central objectives – price stability and financial stability – in only about a quarter of its years of operation. What reforms would be likely to improve that performance? This article focuses on two problems that have plagued the Fed throughout its history: adherence to bad ideas, especially to influence from intellectual fads in macroeconomics, which have produced major policy errors; and politicization of the Fed, which leads it to pursue objectives other than price stability and financial stability. Several reforms are proposed to the structure and governance of the Fed, and its policy mandates, which would promote greater diversity of thought and independence from political pressures, which in turn would insulate the Fed from political pressures and make its thinking less susceptible to intellectual fads.