Michael Derby: Fed’s Historic Error Is in Not Acting Boldly Enough, Romer and Romer Paper Argues
Michael Derby: Fed’s Historic Error Is in Not Acting Boldly Enough, Paper Argues:
Federal Reserve officials have been underestimating their powers and have wounded the economy in the process, a new research paper argues. That observation will certainly surprise many in light of the wide range of unprecedented actions taken by the central bank in recent years. That said, a new paper by University of California, Berkeley, economists Christina and David Romer said policy makers need to embrace the powerful tools at their disposal, believing that when they don’t, the economy pays the price. The paper will be presented Saturday at the American Economic Association annual gathering in San Diego. The research is titled “The Most Dangerous Idea in Federal Reserve History: Monetary Policy Doesn’t Matter.“
