We reconsider the role of financial intermediaries in monetary economics. We explore the hypothesis that financial intermediaries drive the business cycle by way of their role in determining the price of risk. In this framework, balance sheet quantities emerge as a key indicator of risk appetite...

The aim of this paper is to present and evaluate the theory and principles of economic policy applied before the 2008-2009 crisis1. Against this backdrop we will attempt to describe the evolution of targets and tools of economic policy in view of the experiences of recent years and the...

This paper presents a model in which improvement in the future TFP is, on impact, associated with increases in consumption, stock prices, and real wages, and decreases in GDP, investment, hours worked, and inflation. These predictions are consistent with empirical findings of Barsky and Sims....

About six years ago, I published a small book entitled The Quiet Revolution (Blinder 2004). Though its subtitle was Central Banking Goes Modern, I never imagined the half of it. Since March 2008, the Federal Reserve has gone post-modern with a bewildering variety of unprecedented actions that...

Several aspects of the difficulties of policy at the zero lower bound are discussed: The difficulty of credible commitment to higher future inflation, as most New Keynesian models imply is necessary; the need for fiscal and monetary policy coordination; the pitfalls in the taking of quasi-fiscal...

1 January 1999 saw the start of the third and final phase of European Economic and Monetary Union (EMU). Ten years on, membership has expanded from the initial 11 members to reach 16 countries by January 2009. This article reviews the first decade of monetary union from a number of angles....

Unlike my distinguished fellow panelists, I am not the head of a central bank. So I take my marching orders from the conference organizers. In this case, they asked me to ruminate on the extent to which central banks’ independence and credibility have been affected by their actions during the...

Milton Friedman's contributions to and influence on macroeconomics are discussed, beginning with his work on the consumption function and the demand for money, not to mention monetary history, which helped to undermine the post World War 2 Keynesian consensus in the area. His inter-related...

It is proposed to estimate two versions of the potential output for Brazil in the period 1992-2010, through the production function and the HP filter, and use these results to: i) assess the relevance of the output gap in the monetary policy decisions (comparing the two estimates); and ii) to...

It is proposed to estimate two versions of the potential output for Brazil in the period 1992-2010, through the production function and the HP filter, and use these results to: i) assess the relevance of the output gap in the monetary policy decisions (comparing the two estimates); and ii) to...