Finance & Asset Pricing Archives - Page 2 of 3

An intellectual virus, a bubble, or both?

27th April 2018

Finance & Asset Pricing, Theory & Other Problems

The recent phase of market volatility precipitated by the February 2018 ‘flash crash’ has morphed into fears of a growth slowdown, phoney Trumpian trade wars, and real wars. But the initial crash itself may be ...

r* and the range of irrelevance

Eric Lonergan

29th December 2017

Definitions of Money, Economic History, Finance & Asset Pricing, Monetary Policy

6

Despite the fact that interest rates determine all asset valuations, there is nothing close to a general theory of interest rate determination. The rule of thumb when I started working in financial markets was ...

Safe asset issuance & the discovery of oil

Eric Lonergan

17th December 2017

Finance & Asset Pricing

(with guest author, Tristan Hanson) Last month, we made a proposal for a sovereign wealth fund (‘SWF’). It triggered a substantial debate. How would it operate in practice? Are we trying to fund investment o...

When big data is worse than a sample of none

Eric Lonergan

10th June 2017

Finance & Asset Pricing, Theory & Other Problems

4

Michael Mauboussin uses a very simple exercise to illustrate how difficult it is to statistically distinguish skill from luck. Investors are often deemed geniuses or fools based on small samples. Think of those...

Why do asset prices move?

Eric Lonergan

25th April 2017

Finance & Asset Pricing

6

Discussions of volatility tend to reveal eccentric views of asset price determination. 'Uncertainty' is deemed to increase and decrease with remarkable frequency. This is particularly odd given that what we don...

Has the Bank of Japan solved the ‘Piketty problem’?

Eric Lonergan

19th February 2017

Definitions of Money, Economic History, Finance & Asset Pricing, Helicopter Money, Monetary Policy

Japan’s unlikely re-distribution Why is the Bank of Japan (BoJ) trying to raise the rate of inflation? Taking account of its demographic profile, Japan's economic performance has been impressive by developed w...

There is no shortage of safe assets – a short proof

Eric Lonergan

23rd August 2016

Definitions of Money, Finance & Asset Pricing, Theory & Other Problems

Safe assets are bunds, treasuries, gilts, JGBs and other government bonds issued by large developed economies. In one sense, they actually are ‘safe’ assets. They are typically negatively correlated with risk a...

Fiscal policy: a brief reply to Duncan Weldon

Eric Lonergan

28th July 2016

Austerity, Finance & Asset Pricing, Helicopter Money, Monetary Policy

7

Duncan Weldon has written a very perceptive blog, arguing that helicopter money is ‘a solution in search of a problem’ - what we really need is effective fiscal policy. In one sense, Duncan is spot on. A smart ...

Is it permanent? A reply to Nick Rowe

Eric Lonergan

4th April 2016

Definitions of Money, Finance & Asset Pricing, Helicopter Money, Monetary Policy

7

Nick Rowe has written a typically-lucid note which makes clear why it might make a difference to consumer behaviour if a tax cut is permanent, or temporary. To this extent, we are in full agreement: giving some...

Buffett v the Landesbank – the US gets paid to have a trade deficit

Eric Lonergan

26th March 2016

Economic History, Finance & Asset Pricing, Theory & Other Problems

28

It remains conventional wisdom that the US current account deficit is the accumulation of a debt that will one day need to be repaid. There are very good reasons to believe this is false. The US in fact has ne...

An intellectual virus, a bubble, or both?

r* and the range of irrelevance

Safe asset issuance & the discovery of oil

When big data is worse than a sample of none

Why do asset prices move?

Has the Bank of Japan solved the ‘Piketty problem’?

There is no shortage of safe assets – a short proof

Fiscal policy: a brief reply to Duncan Weldon

Is it permanent? A reply to Nick Rowe

Buffett v the Landesbank – the US gets paid to have a trade deficit

Reviews of Eric’s book

CNBC: market sell-off is ‘noise’

Monetary policy & babysitting: why rates are so low, and ‘what’s next?’