What Did I Know, And When Did I Know It?: People have been poring over the just-released 2007 Fed transcripts, and the main surprise seems to be how complacent the institution was. Some members of the open market committee, including Janet Yellen and, let’s give credit where due, Tim Geithner, seem to have had a sense of dread; but the overall consensus was that nothing really bad would happen….
It seems to me that the really big determinant of whether you were intellectually ready for this crisis was how much attention you paid to events in the late 1990s — the crisis in emerging Asia, LTCM here, and the Japanese liquidity trap. I paid a lot of attention back then (as did Nouriel Roubini)…. And the result is that I’ve had a pretty good stretch; the only big thing I got wrong, I think, was in underestimating the stickiness of wages, and hence inflation, and therefore overestimating the risks of actual deflation…
I, by contrast, got it more-or-less completely wrong in that I drew the wrong lessons from the 1990s and before:
That is my abstract from:
Federal Reserve Bank of Boston: October 18-20, 1999: Monetary Policy in a Low-Inflation Environment: A Conference sponsored by the Federal Reserve Banks of Boston, New York, Cleveland, Richmond, Atlanta, St. Louis, and Minneapolis, and the Board of Governors of the Federal Reserve System A diverse group of economists and policymakers gathered in Woodstock, Vermont, in October of 1999 to discuss the conduct of monetary policy in a low-inflation environment. The conference was held at a time when many countries had successfully reduced their inflation rates to the low single digits, an outcome without recent historical precedent that raises important questions about the conduct of monetary policy.
Papers from this conference were published in Journal of Money, Credit and Banking, Vol. 32, No. 4 (November 2000).
Monetary Policy in a Low-Inflation Environment: A Conference Sponsored by the Federal Reserve Banks of Boston, Cleveland, Richmond, Atlanta, St. Louis, and Minneapolis, and the Board of Governors of the Federal Reserve System, October 18-20, 1999
Jeffrey C. Fuhrer and Mark Sniderman, Conference Summary, pp. 845-869
Bennett T. McCallum, "Theoretical Analysis Regarding a Zero Lower Bound on Nominal Interest Rates, " pp. 870-904. Comment by Lawrence J. Christiano, 905-930. Comment by Neil Wallace, 931-935
David Reifschneider and John C. Williams, "Three Lessons for Monetary Policy in a Low-Inflation Era," pp. 936-966. Comment by Christopher, A. Sims pp. 967-972. Comment by Neil Wallace, pp. 973-978
J. Bradford DeLong, "America's Historical Experience with Low Inflation," pp. 979-993. Comment by Ben S. Barnake, pp. 994-997. Comment by William B. English 998
Marvin Goodfriend, "Overcoming the Zero Bound on Interest Rate Policy," pp. 1007-1035. Comment by Ralph C. Bryant, pp. 1036-1050. Comment by Charles Freedman, pp. 1051-1057
Anthony Saunders, "Low Inflation: The Behavior of Financial Markets and Institutions," pp. 1058-1087. Comment by John Y. Campbell, pp. 1088-1092
Policy Panel: Alan S. Blinder, "Monetary Policy at the Zero Lower Bound: Balancing the Risks," pp. 1093-1099. Michael Mussa, "Reflections on Monetary Policy of Low Inflation," pp. 1100-1106. Kazuo Ueda, "Japan's Experience with Zero Interest Rates," pp. 1107-1109