Category Archives: Teaching macroeconomics

Awesome complement-correction to Alan Blinder’s rather saccharine assessment in When the Music Stops

But after what seems an exhaustive review of a now voluminous record of transcripts, exhibits and other evidence from multiple official inquiries, Professor Ball concludes there is “no evidence” that the decision-makers “examined the adequacy of Lehman’s collateral, or that … Continue reading

Posted in Teaching macroeconomics

Helicopter money, by Willem Buiter

But James Hamilton last week provided a nicer, more intelligible, layman’s summary. A helicopter drop of money is a permanent /irreversible increase in the nominal stock of fiat base money with a zero nominal interest rate, which respects the intertemporal … Continue reading

Posted in Teaching macroeconomics

Short-run determinants of the euro-dollar exchange rate over period 2011-14

A nice empirical application exercise of augmenting the interest parity approach to try to determine what is driving changes in expected exchange rates that then affect the current spot rate.  Here, the authors emphasize sovereign risk, that is, risk that … Continue reading

Posted in Teaching macroeconomics

Puerto Rico Governor Alejandro Garcia Padilla: “Now we have more leverage.”

http://www.bloomberg.com/api/embed/iframe?id=V83mJsOrSAGnLadl5AMRKA

Posted in Teaching macroeconomics

Careers in finance: Evaluating MBS and CDO bundles of thousands of mortgages

There is a very nice intro at The Third Way on securitization (in the context of The Big Short).  A nice thing they do is link to the SEC filing for a CDO offered by Long Beach Mortgage (that was … Continue reading

Posted in Teaching macroeconomics

Sheila Bair’s take on bondholders

As she thinks back on it, Bair views her disagreements with her fellow regulators as a kind of high-stakes philosophical debate about the role of bondholders. Her perspective is that bondholders should take losses when an institution fails. When the … Continue reading

Posted in Teaching macroeconomics

Nice profile and interview with Sheila Bair and her role as FDIC chair in 2008 financial crisis

Quite different from Alan Blinder’s portrayal of Bair. As an observer of the financial crisis and its aftermath, I have frankly admired most of what she tried to do. She was tough-minded and straightforward. On financial matters, she seemed to … Continue reading

Posted in Teaching macroeconomics

Impact of the Dodd-Frank Act on credit ratings agencies

The very broad language of the act seems to have of had some significant impact in agency behavior. In response to the Global Financial Crisis of 2008-2009, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) in … Continue reading

Posted in Teaching macroeconomics

What Are the Fed’s Stress Tests? Nice primer from The Wall Street Journal

The Federal Reserve is releasing the results of its annual stress tests of big U.S. banks this week and next. Here is what you need to know about the exams. What do the tests assess? A stress test is an … Continue reading

Posted in Teaching macroeconomics

Headwinds:  Janet Yellen testifying in House hearing

Asked if government regulation was a headwind to growth, Yellen dodges. Businesses cite regulation as a headwind, she notes. Pressed by Rep. Sean Duffy, Republican of Wisconsin, Yellen adds: “I don’t think it is the most important headwind, it may … Continue reading

Posted in Teaching macroeconomics

Autor on trade with China effects

Well I finally went on a long run and so got to listen to the 72 minute long podcast of Russ Roberts talking with MIT economist David Autor.  Disappointing. Mostly the blame falls on Russ Roberts, and he basically admits … Continue reading

Posted in Teaching macroeconomics, United States

Can I go back to school and get a PhD in Economics?

A career in Economics…it's much more than you think from American Economic Association on Vimeo.

Posted in Teaching macroeconomics

Size of mortgage backed securities market

In my macro class a student (Mark or Steve… whatever!) asked about the size of the MBS market relative to Federal Reserve holdings.  Here’s a nice description of the market: Agency mortgage backed securities (henceforth “MBS”) are fixed income securities … Continue reading

Posted in Teaching macroeconomics

I do not understand a moral obligation bond

Hi I would like to borrow some money from you and my contract says I do not have to repay you if it turns out that I can but do not want to.  Of course there is nuance, but the … Continue reading

Posted in Teaching macroeconomics

Lehman Brothers bankruptcy and Repo 105

I have been doing a little extra reading for my MBA macroeconomics class, for the sections on the U.S. financial crisis.  Lehman Brothers’ actionable fraud (resulting in settlements by Ernst & Young, their accounting firm) was for a strategy they … Continue reading

Posted in Teaching macroeconomics

Recent Fed interest rate decision to not raise rates, and video of Fed board meeting

Anticipatory commentary on recent Fed interest rate decision Fed implementation of capital surcharges on too big to fail firms Fed FOMC press release July 29, 2015  “To support continued progress toward maximum employment and price stability, the Committee today reaffirmed … Continue reading

Posted in Teaching macroeconomics

How effective has the Federal Reserve QE program been?

The facts.  After hitting 0% nominal interest rates in the short term Federal Funds market, the Fed purchased almost $3 trillion longer-term assets (mortgage backed securities guaranteed by Fannie Mae and Freddie Mac, and longer-term Treasury bonds guaranteed by the … Continue reading

Posted in Teaching macroeconomics

Bank of America during and after the financial crisis

Bank of America has had to pay a lot of legal settlements and fines since 2009.  The New York Times has a timeline.   Here are the highlights, adding up to about $48 billion: June 7, 2008 $108 Million Settlement on … Continue reading

Posted in Teaching macroeconomics

Stiglitz oped on Greece is a missed opportunity

Here is his conclusion: For now, the Greek government has capitulated. Perhaps, as the lost half decade becomes the lost decade, as the politics get uglier, as the evidence mounts that these policies have failed, the troika will come to … Continue reading

Posted in Teaching macroeconomics

More on global capitalism’s responsibilities for everything that is bad

Even the New York Times cannot escape absurd reporting on absurd discourses.  The discourse, dear reader, is to name something with a label so broad and amorphous that everyone can interpret in any old convenient way, where convenient means “mystify.”  … Continue reading

Posted in Teaching macroeconomics