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James Bullard - Key Policy Topics

Inflation Targeting and Alternatives
  • President Bullard's View

     

    Cites Allan Meltzer’s research on the run-up to the Great Inflation of the 1970s and early 1980s and contrasts that period with the inflation targeting era of the past two decades, when inflation was brought under control. Beyond inflation targeting, the question is posed of whether there could be additional gains to the U.S. economy by being more explicit about the future actions of monetary policymakers.

  • Supporting Materials

     

    "Allan Meltzer and the Search for a Nominal Anchor." Speech, delivered at “Meltzer’s Contributions to Monetary Economics and Public Policy,” Philadelphia, Pa., Jan. 4, 2018.

Yield Curve
  • President Bullard's View

     

    Discusses the possibility of U.S. yield curve inversion and suggests that, with inflation below the Fed’s 2 percent target, it is unnecessary to push monetary policy normalization to such an extent that the yield curve inverts. Such an inversion—whereby short-term interest rates exceed long-term interest rates—has helped predict recessions in the past.

  • Supporting Materials

     

    "Assessing the Risk of Yield Curve Inversion." Presentation, Regional Economic Briefing, Little Rock, Ark., Dec. 1, 2017.

New Characterization
Permazero
  • President Bullard's View

     

    Discusses some recent "neo-Fisherian" ideas and what they might mean for the G-7 monetary policy outlook over the medium and long term. The Fisher equation (nominal rate = real interest rate + expected inflation) is a key element of modern macroeconomic models. It implies that a low interest rate policy can determine a low inflation long-run equilibrium. Models, empirical evidence and consequences are discussed.

  • Supporting Materials

     

    "Permazero in Europe?" Presentation, Frankfurt am Main, Germany.

    "Permazero as a Possible Medium-term Outcome for the U.S. and the G-7." Presentation, Philadelphia, Pa.

    "Permazero." Speech, Washington, D.C.

Income Inequality
  • President Bullard's View

     

    Considers U.S. income, wealth, and consumption inequality through the lens of a standard life cycle framework, and argues that a large fraction (perhaps 75%) of observed inequality in income and wealth is benign, because credit markets work to translate these disparities into relatively smooth consumption over the life cycle. Three questions are posed and answered concerning the monetary policy impact on this process.

  • Supporting Materials

     

    "Income Inequality and Monetary Policy: A Framework with Answers to Three Questions." C. Peter McColough Series on International Economics, Council on Foreign Relations, New York.

Labor Force Participation
  • President Bullard's View

     

    Reviews the existing economic literature on labor force participation in the U.S., and suggests that most movements in labor force participation can be explained with an appropriately rich empirical model emphasizing demographic factors. This suggests, in turn, that recent declines in the unemployment rate indicate genuine improvement in labor market conditions.

  • Supporting Materials

     

    "The Rise and Fall of Labor Force Participation in the U.S." Speech, Washington, D.C.

Monetary Policy During 2008
  • President Bullard's View

     

    Offers perspective on macroeconomic developments during 2008, stressing Fed easing during 2007-2008, unprecedented commodity price movements during the Spring of 2008, and real-time data indicating a modestly successful policy mitigating the financial crisis as of August 2008.

  • Supporting Materials

     

    "The Notorious Summer of 2008." Presentation, Rogers, Arkansas.

Asset Purchases for the ECB
  • President Bullard's View

     

    Suggests that QE may be the best approach to monetary policy for the Euro-area when the policy rate is at zero and inflation is falling.

  • Supporting Materials

     

    "Monetary Policy in a Low Rate Environment." Invited lecture, Frankfurt am Main, and invited lecture, London.

Unemployment Targeting
Central Bank Independence
  • President Bullard's View

     

    Suggests the global consensus on central bank independence is weakening, and that the continued "fiscalization" of monetary policy will complicate monetary policy choices substantially in the future.

  • Supporting Materials

     

    "The Global Battle Over Central Bank Independence." Presentation for AEA panel discussion, San Diego.

Measuring the Stance of Monetary Policy
  • President Bullard's View

     

    Cites research suggesting that the "shadow federal funds rate" may provide an important gauge of the stance of monetary policy when the policy rate is near zero.

  • Supporting Materials

     

    "Shadow Interest Rates and the Stance of U.S. Monetary Policy." Presentation at Washington University in St. Louis.

Nominal GDP Targeting and Price Level Targeting
The European Sovereign Debt Crisis
Dual versus Single Mandate for Monetary Policy
  • President Bullard's View

     

    Shows why achieving price stability can be viewed as completely consistent with achieving full employment in the context of a leading model of the macroeconomy with monetary policy.

  • Supporting Materials

     

    "Hawks, Doves, Bubbles, and Inflation Targets." Invited lecture, Utah State University.

Global Output Gaps
  • President Bullard's View

     

    Discusses some recent literature on global output gaps and the relation to U.S. monetary policy.

  • Supporting Materials

     

    "Global Output Gaps: Wave of the Future?" Presentation, Beijing.

Lower Potential Output in the U.S.
Effectiveness of QE
Fiscal versus Monetary Policy
  • President Bullard's View

     

    Cites and evaluates recent New Keynesian literature to argue that stabilization policy conducted by the fiscal authority is unlikely to be effective.

  • Supporting Materials

     

    "Death of a Theory." Speech, Chicago.

Measuring Inflation
  • President Bullard's View

     

    Argues that headline inflation provides the most appropriate metric for measuring inflation in the U.S., and that traditional arguments in favor of core inflation are much weaker than commonly appreciated.

  • Supporting Materials

     

    "Measuring Inflation: The Core is Rotten." Speech, New York.

Permanent Zero Nominal Interest Rates
  • President Bullard's View

     

    Cites research on liquidity traps to argue that promises to keep the policy rate at zero can be counterproductive, and argues that quantitative easing provides the best hope for avoiding the Japan-like deflationary steady state.

  • Supporting Materials

     

    "Reducing Deflationary Risk in the U.S." Presentation, Marseille.

    "The Seven Faces of 'The Peril.'" Research paper.

The State of Research in Macroeconomics
  • President Bullard's View

     

    Suggests that the U.S. needs to upgrade its macroeconomic research program substantially.

  • Supporting Materials

     

    "Research in Macroeconomics after the Crisis." Presentation, George Washington University.

Financial Crisis
Changing Macroeconomic Landscape
  • President Bullard's View

     

    Cites three popular ideas in macroeconomics on the decline due to the financial crisis, and one previously unpopular idea on the rise.

  • Supporting Materials

     

    "Three Funerals and a Wedding." Speech, Evansville.