How Monetary Policy Got Behind the Curve—and How to Get Back

Description

With the inflation rate in the United States and many other countries on the rise for over a year and nearing double digits, the Hoover Institution hosted its 2022 conference on monetary policy. Policy makers, market participants, and academic researchers gathered to discuss the situation. Many agreed that low interest rates and high money growth were inappropriate given the high inflation rate and evidence that the United States has recovered from the deep recession induced by the pandemic and its policy response in 2020. The thoughtful papers and the thorough discussions in this volume of conference proceedings illustrate the debate about the reasons for this mismatch, as well as how to get back on track. They reflect a range of opinions and perspectives, including examination of the fiscal shock resulting from the COVID pandemic and the related borrowing and spending; emphasis on the value of adherence to rules versus discretion in setting Fed policy; lessons from history in the spikes in federal expenditures during times of war (including the pandemic) and in the timing of the Fed's use of its policy instruments; the role of central banks in the emerging inflation crisis; and strategies toward disinflation. Front Cover Advance Praise for How Monetary Policy Got Behind the Curve—and How to Get Back Plaque Page Title Page Copyright Contents Preface Chapter 1: Introductory Remarks What Monetary Policy Rules and Strategies Say Chapter 2: Perspectives on US Monetary Policy Chapter 3: A Labor Market View on Inflation Chapter 4: It’s Time to Get Back to Rules-Based Monetary Policy Introductory Remarks Fiscal Policy and Other Explanations Chapter 5: Inflation Past, Present, and Future: Fiscal Shocks, Fed Response, and Fiscal Limits Chapter 6: How Monetary Policy Got So Far Behind the Curve: The Role of Fiscal Policy Chapter 7: Current Market Perspectives Introductory Remarks The Fed’s Delayed Exits from Monetary Ease Chapter 8: The Fed’s Monetary Policy Exit Once Again Behind the Curve Discussant Remarks Introductory Remarks Inflation Risks Chapter 9: The Burst of High Inflation in 2021–22: How and Why Did We Get Here? Discussant Remarks Introductory Remarks World Wars: Fiscal-Monetary Consequences Chapter 10: Financing Big US Federal Expenditures Surges: COVID-19 and Earlier US Wars Discussant Remarks Introductory Remarks Toward a Monetary Policy Strategy Chapter 11: Is the Fed “Behind the Curve”? Two Interpretations Chapter 12: Strategy and Execution in US Monetary Policy 2021–22 Chapter 13: Reflections on Monetary Policy in 2021 Introductory Remarks Chapter 14: Inflation Blues: The Fortieth-Anniversary Revival General Discussion About the Contributors About the Hoover Institution’s Economic Policy Working Group Index