tag:blogger.com,1999:blog-6837159629100463303.post1441633906006356053..comments2023-06-18T01:25:08.748-07:00Comments on Information Transfer Economics: An updated unemployment rate projectionJason Smithhttp://www.blogger.com/profile/12680061127040420047noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-6837159629100463303.post-90960487609684000782017-01-09T22:05:27.076-08:002017-01-09T22:05:27.076-08:00I agree that such models could exist, and I have n...I agree that such models could exist, and I have no problem with QE having some effect (each round of QE appearing in the monetary base <a href="http://informationtransfereconomics.blogspot.com/2015/08/explicit-implicit-models.html" rel="nofollow">noticeably impacts</a> short term interest rates, which probably impacted many things across the economy). <br /><br />I appealed to Occam's razor, which isn't really an empirical argument. The effects can be captured by a model where there is an equilibrium value of dU/dt with shocks, Okun's law, and dC/dG ~ 0 in the national income accounting identity ... which at the end of the day has only a few parameters. And it is hard to think of anything that could reduce unemployment by <a href="https://fred.stlouisfed.org/series/JTS6200JOL" rel="nofollow">increasing job openings primarily in the health care sector</a> that has an onset date of January 2014.<br /><br />It's a tough needle to thread without resorting to some kind of complex monetary expectations plus fiscal policy model; if it was a DSGE model, it would probably have 40 parameters.<br /><br />It's an Occam's razor appeal -- so, yes, other models are possible.Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-60974407330609815052017-01-09T06:46:51.357-08:002017-01-09T06:46:51.357-08:00Jason,
Dunno that the assessment of QE1 has an im...Jason,<br /><br />Dunno that the assessment of QE1 has an impact while QE2/QE3 don't holds. You could readily construct a scenario where QE had diminishing marginal impacts, such that the bulk of the realizable effect was obtained by QE1. Outside the confines of a specific linkage between employment and QE, most of the folks I talk to at work who were on trading desks in that time period subscribe to the idea that the signaling of QE1 was at least as important as the actual mechanistic effects of the liquidity injection.Andyhttps://www.blogger.com/profile/01573676479008697357noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-69848289792005151532017-01-07T18:06:55.806-08:002017-01-07T18:06:55.806-08:00I added an update above. In principle, I agree wit...I added an update above. In principle, I agree with QE being a confounding effect. However, the subsequent rounds make the case for confounding QE more difficult ...Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-82324924983360659762017-01-06T16:33:20.389-08:002017-01-06T16:33:20.389-08:00Jason,
I think the statement and the effects of A...Jason,<br /><br />I think the statement and the effects of ARRA is problematic, because the Fed began a round of QE in March of '09. I realize your model predicts that monetary policy may have very limited effect at best near the ZLB, but in terms of just looking at the data, the Fed stimulus is a confounding variable.Antihttps://www.blogger.com/profile/17677035271760844211noreply@blogger.com