- — Miles Kimball (@mileskimball)Tue, Jan 29 2013 07:07:32New post: "Contra John Taylor" http://blog.supplysideliberal.com/post/41785783895/contra-john-taylor …deliberal.com/post/41785783895/contra-john-taylor My reply to John Taylor's WSJ op-ed this morning, backing up my critical tweet.
- — Miles Kimball (@mileskimball)Tue, Jan 29 2013 10:37:02My latest on Quartz: "John Taylor is wrong: the Fed is not causing another recession." http://qz.com/48696/john-taylor-is-wrong-the-fed-is-not-causing-another-recession/ …john-taylo http://blog.supplysideliberal.com/post/41785783895/contra-john-taylor …s-not-causing-another-recession/ Also see http://blog.supplysideliberal.com/post/41785783895/contra-john-taylor
- — Formerwar (@Esguitos)Tue, Jan 29 2013 08:35:37@Noahpinion i don't understand the criticism to the 'low interest rates fuel specilation argument'. Why is that inconsistent with any model?
- — Miles Kimball (@mileskimball)Tue, Jan 29 2013 18:13:11
- — Miles Kimball (@mileskimball)Wed, Jan 30 2013 05:52:56.@ClayNickel Thanks! What I gather from what you say is that QE causes a bit of an uproar for those in the financial industry. Is that fair?
- — Miles Kimball (@mileskimball)Wed, Jan 30 2013 06:24:40We need more in the way of formal economic models of "reaching for yield." What are the best models out there so far? Any links?
- — Miles Kimball (@mileskimball)Wed, Jan 30 2013 06:26:55.@ClayNickel I believe "reaching for yield" is real. My claim in http://blog.supplysideliberal.com/post/41785783895/contra-john-taylor …deliberal.com/post/41785783895/contra-john-taylor is that grokking requires a behavioral finance model.
- — Oren Cheyette (@ocheyette)Wed, Jan 30 2013 06:56:17@mileskimball: RFY is entire point of Fed action. QE3 is Fed RFY to drive asset prices (eg homes) up. But RFY != "speculation".
- — Miles Kimball (@mileskimball)Wed, Jan 30 2013 06:59:41Now I am doubting the reality of "reaching for yield" if I define it as risk premia being lower when nominal interest rates are low.
- — Miles Kimball (@mileskimball)Wed, Jan 30 2013 07:00:38The way people tell the story about reaching for yield, it is as if people are willing to accept a lower risk premium when rates are low.
- — Miles Kimball (@mileskimball)Wed, Jan 30 2013 07:03:00Do people really accept lower risk premia when nominal rates are low (e.g. due to nominal illusion)? If not, what is reaching for yield?
- — Miles Kimball (@mileskimball)Wed, Jan 30 2013 07:04:06Is "reaching for yield" just another way of saying people respond to the risk premium (gap between expected risky return and safe rate)?
- — Miles Kimball (@mileskimball)Wed, Jan 30 2013 07:08:49If "reaching for yield" is a name for the normal response to the risk premium, then it isn't much of a "low rates cause speculation" story.
- — Allison Schrager (@AllisonSchrager)Wed, Jan 30 2013 07:12:13@mileskimball For pension funds there is. Their accounting and funding rules give them every incentive to do just that
- — Miles Kimball (@mileskimball)Thu, Jan 31 2013 06:41:28New post: "Reaching for Yield: The Effect of Interest Rates on Risk-Taking" http://blog.supplysideliberal.com/post/41944384624/reaching-for-yield-the-effects-of-interest-rates-on …deliberal.com/post/41944384624/reaching-for-yield-the-effects-of-interest-rates-on
- — Modeled Behavior (@ModeledBehavior)Thu, Jan 31 2013 06:54:48By “Reaching For Yield” Do You Mean “Demand Curves Slope Downward” http://www.forbes.com/sites/modeledbehavior/2013/01/31/by-reaching-for-yield-do-you-mean-demand-curves-slope-downward/ …m/sites/modeledbehavior/2013/01/31/by-reaching-for-yield-do-you-mean-demand-curves-slope-downward/
- — Modeled Behavior (@ModeledBehavior)Thu, Jan 31 2013 08:14:29@mileskimball I totally agree that the behavioral route needs more research. My notion is just an alternative -k
- — Carola Conces Binder (@cconces)Thu, Jan 31 2013 09:12:38@mileskimball @ModeledBehavior My simple model of reaching for yield is here: http://carolabinder.blogspot.com/2013/01/reaching-for-yield-simple-model.html …blogspot.com/2013/01/reaching-for-yield-simple-model.html
- — Miles Kimball (@mileskimball)Thu, Jan 31 2013 09:30:13
Did you find this story interesting? Be the first to like or comment.