On October 9, we featured a guest commentary from retired Fed economist Robert Hetzel, a paper titled “Rules and a Stable Nominal Anchor.” (See https://kotokreport.com/the-fed-rules-and-a-stable-nominal-anchor/.) This week, Norm Dempsey has whipped up, with the help of Google NotebookLM, a five-minute explainer video that summarizes Fed changes and Bob Hetzel’s argument about how the Fed can more transparently communicate its decision-making framework and better defend its independence if it uses more “rules-based” discussion to explain policy decisions.
It’s short.
It’s engaging.
It’s easy to understand.
It’s easy to share.
Kotok Note: Hetzel’s position is controversial, and the debate about how much the Fed’s decisions should be rules-based vs. how much they should be discretionary is a fair one. At times, the Fed’s dual mandate complicates the choices.
Here’s the link:
When you have watched, pause to consider the role the COVID pandemic played in inspiring the 2020 Fed consensus statement and shift in focus it reflects. On the subject of how the pandemic changed the Fed’s thinking, we also recommend Chapter 12 of our book The Fed and the Flu: Parsing Pandemic Economic Shocks, titled “The Fed Steps In.” Note that readers may obtain a discounted price by buying the paperback via the book website’s order page: https://www.thefedandtheflu.com/order. An eBook version is also available.
