Really great links - Fed - Central banks and stockmarkets

Andy Harless - Fed and Mankiw rule - "Basically, once we recognize that quantitative easing is an option – and one that is no longer being pursued – we can draw the conclusion that the Fed is much tighter today than what the Mankiw Rule would suggest. Indeed, relative to the Mankiw rule, the Fed is much tighter than at any time during the Greenspan-Bernanke years. Since 1957, when the core CPI data series begins, there have only been two times when the Fed was as tight as it is today relative to the Mankiw Rule. One was in 1973, when the effect of Nixon’s price controls was artificially reducing the retrospective inflation rate used in the Mankiw Rule. The other was during the early 1980’s, when the Fed was targeting monetary aggregates rather than interest rates and attempting (with great success) to reduce the inflation rate dramatically."

Roger Farmer - How to reduce unemployment - A new policy proposal - "A fiscal stimulus is ineffective in my model because it can shift one of the equilibrium relationships, but not the other. In terms of Figure 2, a fiscal expansion shifts the ME curve to the right but leaves the NA curve in its depressed state. As a consequence, the interest rate rises and crowds out private consumption expenditure. I see two possible resolutions to this problem.
        First, an investment tax credit that changes the trade-off between holding private capital and government debt would act to shift the NA curve to the right. In combination with a fiscal expansion, this seems to be a promising avenue to explore.
        Second, an extension of the quantitative easing that has been engaged in by national central banks throughout the world holds some promise to directly influence asset markets. An extension of this policy would involve the direct intervention of central banks in national stock markets by offering to exchange government debt for private equity at a fixed price."