Geopolitical Risk, Demand-Supply Dynamics and the Oil Price Rise

#Geopolitical Risk (Iran); #Political #Macroeconomic Risk (Venezuela) combine with strong demand and decreased supply to increase oil prices, which creates #Inflation risk, which might end up raising interest rates (in US and elsewhere)...thus possibly resulting in lower #Growth! https://t.co/dMtPAA5Pqu

— Satyen Baindur (@Satyen_Baindur) May 8, 2018

.@CroftHelima @RBC “There was this view that we were post-geopolitics” as a result of an oversupplied market, said Helima Croft, head of commodity strategy at @RBC. “Now we’re really seeing the reckoning for that.” @WSJecon: 14% ↑ oil prices last mth cd be entirely #GeoPolitical

— Satyen Baindur (@Satyen_Baindur) May 8, 2018

New IMF Global Macrofinancial Model - II

New #IMF Global #Macrofinancial Model #GFM: #Impulse #Response How does #ConsumptionrPriceInflation respond to a 1% rise in the US monetary policy rate? In #SaudiArabia (blue); #SouthAfrica (black) #Poland (red) and US itself (grey); Y-axis in percent; X-axis - time, in quarters pic.twitter.com/fDNfm6vMLA

— Satyen Baindur (@Satyen_Baindur) April 11, 2018

...and looking at effect of a shock in a #MacroPru type of instrument: How does Output (#GDP) change with a 1% reduction in the #Domestic mortgage #LoanToValue #LTV ratio? In #China (blue); In #Spain (black); in #Ireland (red) and in the US itself (grey).. pic.twitter.com/ix2BSEsqiw

— Satyen Baindur (@Satyen_Baindur) April 11, 2018

Should Monetary Policy Worry About the Neutral Interest Rate (R*)?

In his contribution 'Should Policy Makers Worry about R*?’ [published just as the #FederalFundsRate crosses the R*ubicon @tracyalloway] @Lee_Ohanian argues that the level of R* is actually not that important, ∵ 1)The #PhillipsCurve (both w & w/o #NAIRU) is gone 2)Business cycle pic.twitter.com/N37Th9zano

— Satyen Baindur (@Satyen_Baindur) March 13, 2018

...fluctuations r _not_ driven by short-term demand shocks but fiscal/regulatory/technological/demographic 8-50y long cycles. 3)Risk-free bond yields may b low, but returns 2 capital r @ historic highs: ∴ no #SecularStagnation. Govt shd cncrn itslf w longterm growth & investment pic.twitter.com/KmR6noqkw2

— Satyen Baindur (@Satyen_Baindur) March 13, 2018

In a companion contribution, Volker Wieland discusses implications of a very low and/or time-varying R* 4 #TaylorRule, including alternative long and/or medium-term averages of R* & #FirstDifferences (not #levels) via @EconomicsOne @HooverInst @stanford https://t.co/Mx9kYCsnQ8

— Satyen Baindur (@Satyen_Baindur) March 13, 2018

Bank of England Experiment Training Neural Net to Predict CPI Inflation

.@bankofengland results of training a 4-layer #DeepLearning #NeuralNetwork 2 predict UK #CPI Inflation on pre-2005 data: network predicts better than #VAR until #GFC hits, then predicts lower CPI; analysis traces this 2 network reliance on #PrivateDebt & #GDHI; v #BankUnderground pic.twitter.com/J3VJO88LBz

— Satyen Baindur (@Satyen_Baindur) November 13, 2017