Many have asked me what I think about the letter criticizing QE2 which was signed by me and other economists. The letter has created quite a stir. I have already written and spoken many times explaining my opposition to QE2, both before the decision was made and afterwards, so it might be helpful just to give a list of posts on this blog and some media interviews:
- Jackson Hole, August 29 "the benefits in terms of lower rates are very small, while the short-term costs of greater uncertainty about the exit strategy and long-term costs from a loss of independence are large."
- The Taylor Rule Does Not Say Minus Six Percent, September 1 it says .75 percent which provides no rationale for QE2
- More on Massive Quantitative Easing, September 8 which refers to a WSJ oped and many other critiques
- Announcement Effects Do Not Prove QE Works, October 7 so the evidence cited in favor of QE2 is pretty weak
- A New Normal for Monetary Policy? October 27 reflects my concerns that there would be a QE3 and a QE4. Maybe the letter and other objections will reduce the chances of this.
- Milton Friedman Would Certainly Not Have Supported QE2, November 3 so be careful about citing him as support
- Empirical Concerns about Anticipation Effects of QE2, November 5 which disagreed with the Washington Post article by Ben Bernanke defending QE2
- QE2 and G20, November 14 in which an unintended consequence of QE2 is discussed