tag:blogger.com,1999:blog-6837159629100463303.post7137850277413768355..comments2023-06-18T01:25:08.748-07:00Comments on Information Transfer Economics: Monetary regime change in the UK?Jason Smithhttp://www.blogger.com/profile/12680061127040420047noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-6837159629100463303.post-31801092145887975292015-04-03T12:32:51.442-07:002015-04-03T12:32:51.442-07:00That is a good point. However as the model only in...That is a good point. However as the model only incorporates QE in the short term interest rates (successfully for the UK), the different mechanics of QE in Japan, EU, UK and US shouldn't have an impact on the price level -- at least according to the ITM.<br /><br />The model also does fine with the EU and Japan ... see e.g.:<br /><br /><a href="http://informationtransfereconomics.blogspot.com/2015/01/eurozone-deflation.html" rel="nofollow">http://informationtransfereconomics.blogspot.com/2015/01/eurozone-deflation.html</a><br /><br /><a href="http://informationtransfereconomics.blogspot.com/2015/03/japan-inflation-update.html" rel="nofollow">http://informationtransfereconomics.blogspot.com/2015/03/japan-inflation-update.html</a><br /><br />I do have a speculative post that I am working on right now ... maybe monetary policy in the UK is identical to its monetary policy in the 1930s and 40s with a pegged interest rate. Previously that was associated with a change in the monetary regime:<br /><br /><a href="http://informationtransfereconomics.blogspot.com/2013/11/the-long-run-in-uk.html" rel="nofollow">http://informationtransfereconomics.blogspot.com/2013/11/the-long-run-in-uk.html</a>Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-23866512364416800522015-04-03T12:20:13.558-07:002015-04-03T12:20:13.558-07:00That is true, especially for countries with lots o...That is true, especially for countries with lots of imports and/or exports relative to GDP.Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-84246887136788592652015-04-03T04:31:53.150-07:002015-04-03T04:31:53.150-07:00Some more thoughts...
Does the model still work f...Some more thoughts...<br /><br />Does the model still work for the Euro zone and other countries? I'm asking because the Fed's first QE program was apparently different from those conducted in Japan and the UK, as well as the latter QE programs of the Fed. Bernanke called it "credit easing" at the time:<br /><br />http://en.wikipedia.org/wiki/Quantitative_easing#Credit_easing<br /><br />From what I understand, the idea was to improve the capital position of banks by purchasing various assets on their balance sheets (which aren't government bonds). Other QE programs focused on government debt, I think. Anyway, what I'm trying to say is that perhaps the monetary regime changed not just in the UK but in many other countries, and that it is the US that is an exception.Mnoreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-64187452103962875792015-04-02T18:50:21.891-07:002015-04-02T18:50:21.891-07:00In that case, perhaps "monetary regime change...In that case, perhaps "monetary regime change" could be assessed by relative value of the currency to a basket of other currencies- that would certainly change the information value of a unit of currency.Todd Zorickhttps://www.blogger.com/profile/10976192775890569092noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-74111799723258274092015-04-02T18:45:52.020-07:002015-04-02T18:45:52.020-07:00Interesting -- thanks for the link, M.
A signific...Interesting -- thanks for the link, M.<br /><br />A significant depreciation could be a catalyst for a monetary regime change, but that one looks like it came from outside (exogenous shock), and not a monetary policy decision. So it would still be unexplained by the ITM ... maybe that is how it should be.Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-861242815208990032015-04-02T05:44:57.045-07:002015-04-02T05:44:57.045-07:00No ideas about the model, but I know some people a...No ideas about the model, but I know some people attribute the high inflation in post-2008 Britain to the significant depreciation of Sterling around that time, e.g.<br /><br />https://fixingtheeconomists.wordpress.com/2014/04/02/making-sense-of-the-british-devaluation-of-2007-2008/<br /><br />Maybe this will help you.Mnoreply@blogger.com