Monetary Policy

Monetary Policy

Research

Jerry Brito, Andrea Castillo | May 03, 2016
As the world’s first decentralized digital currency, Bitcoin has the potential to revolutionize online payment systems and commerce in ways that benefit both consumers and businesses. Individuals can now avoid using an intermediary such as PayPal or submitting credit card information to a third party for verification—both of which often involve transaction fees, restrictions, and security risks—and instead use bitcoins to pay each other directly for goods or services.
Jason E. Taylor, Andrea Castillo | Jan 13, 2015
A new study published by the Mercatus Center at George Mason University examines the use of expansionary fiscal policy to stimulate a contracting economy. The study concludes that attempts to use fiscal policy to solve broader economic troubles have failed even by the theory proponents’ own standards. In addition to being poorly timed and targeted, stimulus spending has led to permanent increases in the size and scope of government.
Alexander Salter | Dec 04, 2014
In a new study for the Mercatus Center at George Mason University, scholar Alexander William Salter examines several different proposed rules that the Fed could follow. Salter provides a framework to help policymakers better understand how incentives and information can affect monetary policy and discusses discretion-based and rule-based approaches to monetary policy.
Jeffrey Rogers Hummel | Sep 16, 2014
Many economists and economic commentators fear that the Federal Reserve does not have an adequate exit strategy from the quantitative easing that took place during the financial crisis. Its bloated balance sheet has allegedly left a looming monetary overhang that the Fed will not be able to manage once the economy returns to normal.
David Beckworth | Jul 10, 2014
Inflation targeting emerged in the early 1990s and soon became the dominant monetary-policy regime. It provided a much-needed nominal anchor that had been missing since the collapse of the Bretton Woods system.
Benjamin M. Blau | Oct 24, 2013
This paper analyzes the characteristics of banks that received emergency loans from the Federal Reserve during the recent financial crisis. Using unique data consisting of emergency loan transactions, I provide evidence that larger banks, in terms of assets and market capitalization, were more likely to receive emergency support.

Testimony & Comments

Expert Commentary

May 13, 2016

Although it's been a few years since the most recent increase, the $15 proposals cannot simply be written off as a cost-of-living adjustment, as the consumer price index is up only some 11 percent since the previous increase.
May 11, 2016

The Mercatus Center at George Mason University is pleased to announce David Beckworth will join as a senior research fellow with the Program on Monetary Policy, starting July 1st, 2016.
Mar 14, 2016

The Fed is a monetary superpower, affecting monetary conditions across the globe. It needs to better recognize this role and act now with decisive easing.
By David Beckworth, Ramesh Ponnuru |
Feb 08, 2016

Bold theses should receive skeptical reactions, and ours did. We argued in the New York Times that, contrary to what just about everyone believes, the financial crisis and the Great Recession that blew up the American economy in 2008 were not the necessary consequences of a housing bust.
Feb 04, 2016

See if this sounds familiar. The economy is in a deep slump. The Fed cuts interest rates close to zero and then tries quantitative easing (QE). A banking crisis begins in the United States and then spreads to Europe, where even sovereign debt is no longer safe. Individual countries are locked into a single monetary regime and unable to stimulate their economies. Am I my describing the Great Recession? Yes, but I’m also describing the Great Depression of the early 1930s. Now let’s push the comparison a bit further.
Jan 14, 2016

The Fed began a new chapter in its history in December by raising interest rates for the first time in almost a decade. A key reason for this historic liftoff of interest rates is the belief by Fed Chair Janet Yellen and other monetary officials that the "natural" interest rate has risen and the Fed must follow suit. So what is this mysterious natural interest rate, and why must the Fed follow it?

Charts

This week’s chart is a re-creation of a chart produced by the Richmond Fed. The share of financial sector liabilities subject to implicit or explicit government protection from losses grew from 45 percent in 1999 to 60 percent in 2013 and amounts to a staggering $26 trillion.

Experts

Podcasts

David Beckworth | May 16, 2016
National Review senior editor Ramesh Ponnuru discusses his adventure into monetary economics. He shares his thoughts on some of the current-day misconceptions surrounding Federal Reserve policy and makes the case for a more nuanced, yet rules-based approach toward monetary policy.

Recent Events

Please join the Mercatus Center’s Program on Monetary Policy Director Scott Sumner, and Visiting Scholar David Beckworth, for an in-depth discussion on the Federal Reserve. Just a week after Federal Reserve Chair Janet Yellen’s Congressional testimony, Mercatus scholars will analyze current Federal Reserve policy (like the December rate hike), and lead an informative discussion on the future of monetary policy.

Books

Scott Sumner | Dec 01, 2015
The Midas Paradox is a landmark treatise that solves mysteries that have long perplexed economic historians, and corrects misconceptions about the true causes, consequences, and cures of macroeconomic instability. Like Milton Friedman and Anna J. Schwartz’s A Monetary History of the United States, 1867–1960, it is one of those rare books destined to shape all future research on the subject.

Media Clippings

Benjamin M. Blau | Oct 27, 2013
Benjamin Blau cited at The Washington Examiner.
Benjamin M. Blau | Oct 24, 2013
Benjamin Blau cited at International Business Times.
Jerry Brito | Oct 03, 2013
Jerry Brito cited at The Wall Street Journal.
Jerry Brito | Oct 03, 2013
Jerry Brito cited at Los Angeles Times.
Jerry Brito | Oct 03, 2013
Jerry Brito cited at BBC.
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