Post by account_disabled on Feb 28, 2024 7:08:11 GMT 1
There are also questions about whether, in the context of greater use of industrial policy, the conventional wisdom on a fiscal-monetary pact needs to be revised. Finally, there is a case for the Fed to follow the Bank of England's welcome decision to institute an external assessment of its forecast errors, an important step to counter the erosion of both the central bank's credibility and the effectiveness of its policy. future orientation. as well as mitigate the potential damage to political independence. The third strategy involves setting aside both immediate and long-term policy issues, focusing instead on a specific economic issue with few immediate implications. While it is not an obvious approach for a Fed chair who is not an economist by training, it may be the most cautious course for someone who has had communication problems. It also aligns with the wide range of topics that captivate researchers within and outside the economics profession.
This smacks of Japanese-style “evergreen lending,” which perpetuated state-led support for over-leveraged banks and corporations, prolonging the first of Japan’s lost decades. In short, Chinese politicians are fighting Job Function Email Database different ingredients of their mixed problem. This increases the risks of inconsistency, a “remedy” that may appear to address one aspect of the challenge, but in doing so exacerbates another. If, for example, the State Council succeeds in protecting insolvent property developers, the resulting moral hazard encourages greater leverage elsewhere. Likewise, the CSRC's attempts to manage the Chinese stock market may drive stock prices above the intrinsic valuation of a low-growth economy, which could be a recipe for another asset bubble.
Heavily overinvested Chinese economy really need a new round of monetary stimulus? This is what happens when a combined system has problems. By opting for a combination of market-based and state-led “solutions,” Chinese policymakers are unwittingly engaging in “whack-a-mole,” an approach that creates more problems than it solves. This borrows from a time-worn countercyclical playbook that was effective when China was less developed, less leveraged, less prone to asset bubbles and less susceptible to zombie borrowers. That playbook seems increasingly challenged. Now that China faces the harsh headwinds of a shrinking population and falling productivity, it may see no choice but to continue using it. In the end, however, that could be the final stumbling block for China's weak mixed economy.
This smacks of Japanese-style “evergreen lending,” which perpetuated state-led support for over-leveraged banks and corporations, prolonging the first of Japan’s lost decades. In short, Chinese politicians are fighting Job Function Email Database different ingredients of their mixed problem. This increases the risks of inconsistency, a “remedy” that may appear to address one aspect of the challenge, but in doing so exacerbates another. If, for example, the State Council succeeds in protecting insolvent property developers, the resulting moral hazard encourages greater leverage elsewhere. Likewise, the CSRC's attempts to manage the Chinese stock market may drive stock prices above the intrinsic valuation of a low-growth economy, which could be a recipe for another asset bubble.
Heavily overinvested Chinese economy really need a new round of monetary stimulus? This is what happens when a combined system has problems. By opting for a combination of market-based and state-led “solutions,” Chinese policymakers are unwittingly engaging in “whack-a-mole,” an approach that creates more problems than it solves. This borrows from a time-worn countercyclical playbook that was effective when China was less developed, less leveraged, less prone to asset bubbles and less susceptible to zombie borrowers. That playbook seems increasingly challenged. Now that China faces the harsh headwinds of a shrinking population and falling productivity, it may see no choice but to continue using it. In the end, however, that could be the final stumbling block for China's weak mixed economy.