Op Eds 

Here you will find links to a series of Op Ed pieces that I wrote between 2008 and 2014, before I started my own blog, Roger Farmer's Economic Window. Recently, I have posted most of my Op Ed pieces directly on my blog. I plan to write more pieces for traditional media outlets in the near future.

  • Will Americans Ever Vote for a far-reaching Wealth Tax?. What Thomas Piketty has shown us, is that since 1980, it is only the rich and the very rich who have benefited from growth; The Guardian Economics Blog October 20th 2014, HERE

  • No More Boom and Bust: The Financial Policy Committee has Time on its Side. The Bank of England's FPC should buy shares in the stock market when the PE ratio is low, and sell them when it is high.  The Guardian Economics Blog August 12th 2014, HERE

  • A sovereign wealth fund can save the UK from market meltdown. Ben Bernanke suggested in June that the pace of quantitative easing might slow by the end of the year. Global markets dropped by 4 per cent in two days. It has taken several weeks – and carefully reassuring congressional testimony from the US Federal Reserve chairman – to calm them. Financial Times July 18th 2013, HERE

  • Confessions of a Keynesian Heretic. I may be the only self-professed Keynesian who is not actively campaigning for large public infrastructure projects. Don’t get me wrong; I believe repairing a few bridges or building an oil pipeline or two would be good things to do. But it is unhelpful to confuse arguments for public investment with plans to restore full employment. Financial Times April 1st 2013, HERE

  • Why financial markets are inefficient. The efficient market hypothesis – in various forms – is at the heart of modern finance and macroeconomics. This column argues that market efficiency is extremely unlikely even without frictions or irrationality. Why? Because there are multiple equilibria, only one of which is Pareto efficient. For all other equilibria, the whims of market participants cause the welfare of the young to vary substantially in a way they would prefer to avoid, if given the choice. This invalidates the first welfare theorem and the idea of financial market efficiency. Central banks should thus dampen excessive market fluctuations. Vox EU January 22nd 2013 HERE  

  • Central banks should do much more. The US recovery has stalled, the UK has fallen back into recession and most of Europe is mired in a debt quagmire to which there appears to be no quick exit. It is against this background that Charles Evans, president of the Federal Reserve Bank of Chicago, has come out aggressively in favor of additional Fed actions. Financial Times May 8th 2012, HERE  

  • The Fear Factor. The dominant macroeconomic paradigm since the early 1980’s does not include unemployment as a factor, and it does not assign an independent role to confidence. But confidence is a scientific concept that can be inferred from observing asset price movements....  Project Syndicate September 16th 2011 HERE This piece is available in Spanish  French    Italian German  Czech  Chinese  and Arabic . Click on the appropriate flag for the translation.

  • Does Fiscal Policy Matter? Is there a better way to reduce unemployment? Can government spending help the economy recover from a recession by boosting job creation and lowering unemployment? Or is it a waste of money? This column addresses this question and others using a unique framework. It explains why fiscal policy was effective at ending the Great Depression but it argues that a big fiscal expansion may not be the best solution this time round. VoxEU September 15th 2011 HERE

  • Market psychology, high unemployment and rational bubbles. One explanation for the 2007-09 global crisis is that consumers, markets, and politicians were gripped by “irrational exuberance” that led them to believe the record-high house prices and stock prices were sustainable. This column proposes a new explanation based on rational behaviour and microeconomic theory. It argues that however high stock prices rise, there is always an equilibrium in which they can rise further. VoxEU August 18th 2011 HERE

  • Don’t let banks gamble with taxpayer money. The US is in the process of implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act. In the UK, the Vickers Commission has released interim recommendations to “ring-fence” the retail operations of banks from their investment banking activities. Financial Times April 21st 2011 HERE  

  • How to raise interest rates and lower unemployment at the same time. In August of 2010, I argued on this Forum that the Fed should expand its policy of quantitative easing. By now the US is well into a programme that, by the end of June 2011, will have added $600bn to the Fed’s balance sheet. There is widespread discussion of what to do next. Financial Times April 10th 2011 HERE  

  • Unemployment Economist's View (March 29th 2011) Farmer on Williamson on Farmer and Kocherlakota

  • How to restore confidence in the US economy without inflating a new asset market bubble. Ben Bernanke, US Federal Reserve chairman, has announced that the Fed is about to go on a $600bn spending spree by buying $75bn of treasury bonds every month for eight months. Not all of the members of the Federal Reserve Open Market Committee agree that a second round of quantitative easing is a good idea. Thomas Hoenig of Kansas City, Jeffrey Lacker of Richmond and Charles Plosser of Philadelphia have expressed concerns that QE2 could lead to inflation through excessive monetary expansion and that it might inflate a new stock market bubble. They may be right. Financial Times November 15th 2010 HERE  

  • We Need More Quantitative Easing to Prevent Another Great Depression: Round 2. There is a widespread perception that quantitative easing is synonymous with increasing the money supply. But it is more than that. In 2006, the Bank of England began to pay interest on the reserves of commercial banks held at the Bank. QE, in conjunction with the payment of interest on reserves, allows the Bank to influence the short term interest rate and at the same time, to influence the prices of long term assets. This new flexibility is the key to understanding how to prevent inflation without creating another Great Depression. Financial Times August 25th 2010 HERE  

  • We Need More Quantitative Easing to Create Jobs. I argue in this piece that: 1) Quantitative easing should be expanded 2) Even if the Bank of England were to buy the entire UK national debt that this policy would not be inflationary 3) The global recovery is faltering and an expansionary policy is needed to encourage private investors to create jobs 4) Additional quantitative easing could save as much as £38.5bn a year in interest costs to the taxpayer Financial Times August 18th 2010 HERE  

  • Austerity or Stimulus? We don't have to choose. In a pair of articles in Tuesday ‘s FT, Brad DeLong and Niall Ferguson present opposing arguments for and against an extension of the fiscal stimulus. Both make a persuasive case. Farmer's FT Comment July HERE  

  • How to Bail out Good Banks and let Bad Banks Fail. How should large-scale systemic failures of a country’s financial system be addressed? Nobody wants to bail out banks that make bad decisions. But to save a financial system from collapse requires preventing all banks from failing at the same time. We need a way to bail out good banks but allow bad banks to fail. This article shoes how we can do that without costing the taxpayer a penny.  Project Syndicate June 21st 2010 HERE This piece is available in Spanish  Russian    French  German  Chinese  and Arabic . Click on the appropriate flag for the translation.

  • Economic Policy Through the Lens of History. This piece describes the interplay of economic ideas and historical events and is accessible to students at all levels including high school. During the Great Depression of the 1930s and stagflation of the 1970s, academic economists developed new theories to explain the failure of old ideas. The 2008 crisis, like it's predecessors,  will lead to new theories and new policies to guide our economy into the next century.   History Now, June 2010 HERE  

  • Why the Fed Should Buy Stocks. Capitalism can sometimes go badly wrong, and when it does, high unemployment can persist forever. The market crash of 2008 caused the recession. Unless we restore confidence, there is a good chance of a double dip recession. This piece shows how to prevent this from happening.  Investment Dealers' Digest June 11th 2010 HERE

  • A history lesson from Lombard Street for Wall Street in 2010. Anyone who thinks that the 2008 financial crisis is a new and unusual event on the world stage should read Walter Bagehot’s book, Lombard Street, written in 1873. Bagehot was editor-in-chief of The Economist magazine and the son-in-law of its founder James Wilson. Financial Times April 8th 2010 HERE

  • Macroeconomics for the 21st Century: Part 2: Policy What are the implications of combining Keynesian ideas with Walrasian general equilibrium theory in a way that does not assume sticky prices? This column presents the second in a two-part outline of a new paradigm for macroeconomics in the 21st century, focusing on policy. It argues that fiscal policy is not the right response to a financial crisis. VoxEU February 28th 2010 HERE

  • Macroeconomics for the 21st Century: Part 1: Theory. What are the implications of combining Keynesian ideas with Walrasian general equilibrium theory in a way that does not assume sticky prices? This column presents the first of a two-part outline of a new macroeconomics paradigm for the 21st century, starting with the theory. VoxEU February 27th 2010 HERE

  • The Stimulus Plan, Unemployment and Economic Theory: Why I Don’t Believe in Fairies. For the past nine months I have been presenting some new ideas at academic conferences where economists have been grappling with the current financial crisis. Boston, Montreal, Amsterdam, London, Cleveland, Sydney, Atlanta … Only the venues change. The participants and the papers are always the same... Financial Times January 28th 2010 HERE

  • Farewell to the Natural Rate: Why Unemployment Persists Most policymakers subscribe to the existence of a natural rate of unemployment. This column provides a visual history of unemployment, vacancies, and inflation in the US and explains why the natural rate hypothesis is false. It demonstrates that the economy can come to rest in an equilibrium at any point on the Beveridge curve. The equilibrium is selected by the confidence of households and firms that pins down asset values. VoxEU January 6th 2010 HERE YouTube Video of Unemployment and Inflation in Real Time HERE

  • Don’t give up on quantitative easing: We can have our cake and eat it too. According to a widely-held consensus view, the world is slowly emerging from the Great Recession of 2008. Growth in China is projected to top 8 per cent in 2009. Australia raised the interest rate... Financial Times October 16th 2009 HERE

  • The Great Recession Ended in May of 2009 A number of economists, including Chairman Bernanke of the US Federal Reserve, have declared that the current recession is very likely over (Robb, 2009) and two reporters for Forbes (Wesbury and Stein, 2009) have dated the end of the recession to May of 2009. This short piece adds credence to that statement by studying the past behavior of the stock market and the unemployment rate. VoxEU October 5th 2009 HERE

  • The Great Recession and the Coming Jobless Recovery. Confidence is slowly returning to the stock market and the S&P is back to the level it reached when President Obama took office in January. This is enough to prevent a further collapse in spending; the Obama stimulus package may even move us into positive territory for US gross domestic product growth. But these ‘green shoots of recovery’ are not enough to create the jobs needed to restore full employment in the US.... Financial Times August 6th 2009 HERE

  • Why Keynes Was Right And Wrong, And Why it Matters. In the FT’s Economists’ Forum, Benn Steil wrote a stimulating piece n which he argued that Keynes was wrong. His argument is that interpretations of Keynesian economics are all based on the assumption that wages and prices are sticky. ... Financial Times May 27th 2009 HERE

  • Macroeconomics: Adjusting the Big Picture: Roger Farmer, featured as one of three experts weighing in on how to better handle, and even avoid, the next global financial crisis: Business Week April 16th 2009 HERE

  • Bah Humbug: Stagflation is Just Around the Corner; Economic policy is in a muddle. Academic voices are flooding the blogosphere and the intelligent policymaker can be forgiven for being unclear as to which side to listen to. Financial Times April 6th 2009 HERE

  • Japan's Price Keeping Operations Can Succeed Sir, In your editorial "Political paralysis" (February 25), you disparage the idea that the Japanese government should start “price-keeping operations” by, in your words, "spending 25,000bn yen of public money to prop up the stock market" Financial Times February 27th 2009 HERE

  • How to Fix the Banks We don’t need to nationalise the banks. We don’t need to guarantee bad assets. We don’t need government to own voting shares in private banks. We don’t need to create a bad bank full of toxic assets. Financial Times February 9th 2009 HERE

  • The Government Should Target the Stock Market This column contains a synopsis of the economics that underlies the Financial Times articles listed below. VoxEU February 4th 2009 HERE

  • A New Monetary Policy for the 21st Century For the past seventy years, policy makers have relied on fiscal and monetary policy to combat recessions. Monetary policy works by lowering real interest rates and stimulating private expenditure. Financial Times January 12th 2009 HERE

  • How to Prevent the Great Depression of 2009 The US recession that began in December 2007 resulted in 403,000 lost jobs in September, 320,000 in October and 533,000 jobs in November. Projections for 2009 are ominous. Financial Times December 30th, 2008 HERE

 

Last Updated 05-25-2016