Hoover Institution (Stanford, CA) — Hoover’s leading economists have completed their trifecta of books aimed at guiding global monetary policymakers back to inflation-cutting ways with their new book, Getting Global Monetary Policy on Track.
Based on the May 2024 Monetary Policy Conference held at the Hoover Institution, Stanford University, Getting Global Monetary Policy on Track reviews recent global inflation, asking how central banks could have better responded, and how they can improve their forecasting and policy strategies to avoid inflationary bursts in the future. Discussions delve into the interactions of fiscal and monetary policies, digital currency, and how the European Central Bank has become more dovish, preferring to keep interest rates low.
The new book, edited by leading Hoover economists Michael D. Bordo, John H. Cochrane, and John B. Taylor, builds upon the themes established in 2024’s Getting Monetary Policy Back on Track, and 2023’s How Monetary Policy Got Behind the Curve – and How to Get Back.
The publication shares the presentations from economic experts around the globe, who contribute analysis of monetary policy and strategy from Asia, Europe, Latin America, and the United States, in large economies and in emerging markets. It also reproduces the lively and informative discussions at the conference.
Essays on financial regulation examine asset value and equity levels in the US banking system, Treasury market turmoil, Federal Reserve independence, the 2023 UK pension fund meltdown, and regulatory expansion.
Additional topics include labor market responses to the surge in remote work; how Israel handled financial shocks following the 2023 Hamas attack; continued fallout from the COVID-19 pandemic: and the supply, fiscal, and relative demand shocks of the pandemic and how central banks handled post pandemic inflation.
Key takeaways:
-
- Central banks across the globe were slow to spot and react to rising inflation in 2021. In the United States, the Federal Reserve deviated too far from monetary policy rules by holding the key interest rate too low for too long, allowing inflation to rise.
- The rise of work-from-home arrangements may be a factor in declining inflation. Research suggests that some firms have offered remote and hybrid working options as a way of tempering wage demands from their workers, and that for white-collar workers, the average value of working from home is equivalent to 8 percent of their gross pay.
- For US banks, financial stability puts important constraints on monetary policy that central banks can follow. US banks held more than $9 trillion in uninsured deposits at the beginning of 2022, something that proved fatal for Silicon Valley Bank and several others. Federal regulators and supervisors missed this risk buildup, calling into question their ability to execute the far more complex regulations currently in force and contemplated.
- Presenters debated the value of transparent communications. Former US Treasury secretary Larry Summers said central bankers need to become less specific in their forecasts given the uncertain nature of the economy and financial markets; while Chicago Fed chair Austan Goolsbee, also an Obama-era advisor, said making the bank’s deliberations and pronouncements public creates better decision making.
Advance Praise for Getting Global Monetary Policy on Track:
“This outstanding volume is packed with extremely useful insights from many of the foremost experts serving on the front lines of public policy about the recent performance of central banks and the challenges ahead. It is especially timely.”
—Mark G. Duggan, Wayne and Jodi Cooperman Professor of Economics, Stanford University, and former Trione Director, Stanford Institute for Economic Policy Research
“This excellent volume is essential for understanding the recent history of monetary policy and our path forward. Current and former Fed officials and leading academics all offer valuable insight into the consequential policy questions raised by the events of the last three years. Highly recommended.”
—Randal Quarles, chairman and founder, Cynosure Group, and former vice chairman of the Federal Reserve System
“The Hoover monetary policy series is a ‘must read’ for all academics, central bankers, and market professionals who are looking for in-depth analysis together with a broad perspective on global monetary policy before, during, and after the surge of inflation.”
—Volker Wieland, Endowed Chair of Monetary Economics and managing director, Institute for Monetary and Financial Stability, Goethe University, Frankfurt
About the Editors:
Michael D. Bordo is a distinguished visiting fellow at the Hoover Institution and a Board of Governors Professor of Economics at Rutgers University, where he directs the Center for Monetary and Financial History.
John H. Cochrane is the Rose-Marie and Jack Anderson Senior Fellow at the Hoover Institution, a research associate of the National Bureau of Economic Research, and an adjunct scholar at the Cato Institute.
John B. Taylor is the George P. Shultz Senior Fellow in Economics at the Hoover Institution and the Mary and Robert Raymond Professor of Economics at Stanford University, where he directs the Introductory Economics Center.
Other contributors
Contributors and discussants: Luigi Bocola, Michael D. Bordo, Markus K. Brunnermeier, John H. Cochrane, Steven J. Davis, Darrell Duffie, Luis Garicano, Austan D. Goolsbee, Yuriy Gorodnichenko, Stephen Haber, Zhiguo He, Peter Blair Henry, Marianna Kudlyak, Ross Levine, Mickey D. Levy, Tobías Martínez González, Emi Nakamura, Edward Nelson, Juan Pablo Nicolini, Emilio Ocampo, Christopher Ong, Athanasios Orphanides, Hester M. Peirce, Charles I. Plosser, Valerie Ramey, Condoleezza Rice, Andrew Sacher, Amit Seru, Christina Parajon Skinner, Jón Steinsson, Lawrence H. Summers, John B. Taylor, Wei Wei, Carolyn A. Wilkins, John C. Williams, Amir Yaron
For coverage opportunities, contact Jeffrey Marschner, 202-760-3187, jmarsch@stanford.edu.
