What's happening in monetary policy and macroeconomics.
Thursday, August 18, 2011
Plosser Elaboration
You can see Charles Plosser explaining himself here. He is quite thoughtful, and I did not hear him say anything I disagreed with. There's a funny part where his interviewer asks him if the Fed is getting too "mathy." See what you think.
Plosser suggested the fed should lie about the true state of the economy in order to maintain "confidence". This is the fatal flaw in the "communications and expectations" paradigm of bernanke woodford mishkin blinder and apparently plosser - politicians have an incentive to sugar-coat reality.
Steve: The interview is great. Thsnks for drawing attention to it.
ReplyDeletePlosser suggested the fed should lie about the true state of the economy in order to maintain "confidence". This is the fatal flaw in the "communications and expectations" paradigm of bernanke woodford mishkin blinder and apparently plosser - politicians have an incentive to sugar-coat reality.
ReplyDeleteIf you're looking for "mathiness," go to 4:40 or so.
ReplyDelete