Tuesday, September 25th, 2012 2:46 pm

QE3

Question A: Even if the third round of quantitative easing that the Fed recently announced increases real GDP growth over the next two years, the increase will be inconsequential.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question B: Even if the third round of quantitative easing that the Fed recently announced increases annual consumer price inflation over the next five years, the increase will be inconsequential.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question C:

Even if inflationary pressures rise substantially as a result of quantitative easing and low interest rates, the Federal Reserve has ample tools to rein inflation back in if it chooses to do so.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question A Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Uncertain 3
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale No Opinion
My guess is QE3 will have a small positive effect on GDP, but I am not well informed on this issue.
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Uncertain 3
Bio/Vote History
         
Autor David Autor MIT No Opinion
Bio/Vote History
         
Baicker Katherine Baicker Harvard No Opinion
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Uncertain 1
Bio/Vote History
         
Chetty Raj Chetty Stanford Uncertain 4
Bio/Vote History
         
Chevalier Judith Chevalier Yale Did Not Answer
Bio/Vote History
         
Currie Janet Currie Princeton Disagree 5
Bio/Vote History
         
Cutler David Cutler Harvard Disagree 3
Bio/Vote History
         
Deaton Angus Deaton Princeton Uncertain 1
What does inconsequential mean?
Bio/Vote History
         
Duffie Darrell Duffie Stanford Disagree 7
The impact might be small, but "inconsequential" , to me, means "of negligible value." The Fed is doing this for a reason, not for fun.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Disagree 8
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Uncertain 3
Purchases are open ended so consequences will depend on magnitude which remains uncertain. And does your question encompas forward guidance?
Bio/Vote History
         
Fair Ray Fair Yale Agree 5
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale No Opinion
Bio/Vote History
         
Goldin Claudia Goldin Harvard Agree 1
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Agree 6
Bio/Vote History
         
Greenstone Michael Greenstone Chicago No Opinion
Bio/Vote History
         
Hall Robert Hall Stanford Agree 8
Current activity depends mainly on shorter rates, so lowering long rates has little effect. See my 1977 Brookings paper.
-see background information here
Bio/Vote History
         
Holmström Bengt Holmström MIT Uncertain 4
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Agree 7
Bio/Vote History
         
Judd Kenneth Judd Stanford Uncertain 5
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Strongly Agree 7
Too many other negative pressures around the world (europe, fiscal cliff, china) for the Fed's policy to make much difference
Bio/Vote History
         
Klenow Pete Klenow Stanford Disagree 5 Bio/Vote History
         
Lazear Edward Lazear Stanford Agree 7
Bio/Vote History
         
Levin Jonathan Levin Stanford Did Not Answer
Bio/Vote History
         
Maskin Eric Maskin Harvard Did Not Answer
Bio/Vote History
         
Nordhaus William Nordhaus Yale Disagree 8
Likely to be small, but consequential if it has net job creation.
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Uncertain 9
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Uncertain 3
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Did Not Answer
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Agree 4
Bio/Vote History
         
Shin Hyun Song Shin Princeton Uncertain 6
Bio/Vote History
         
Stokey Nancy Stokey Chicago Strongly Agree 2
Bio/Vote History
         
Thaler Richard Thaler Chicago Uncertain 1
don't know and will never know. Economy is likely to start growing at some point and no one will know what caused it.
Bio/Vote History
         
Udry Christopher Udry Yale No Opinion
Bio/Vote History
         
Zingales Luigi Zingales Chicago Agree 6
Bio/Vote History
         

Question B Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Uncertain 3
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale No Opinion
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Uncertain 3
Bio/Vote History
         
Autor David Autor MIT No Opinion
Bio/Vote History
         
Baicker Katherine Baicker Harvard No Opinion
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Agree 2
Bio/Vote History
         
Chetty Raj Chetty Stanford Uncertain 1
Bio/Vote History
         
Chevalier Judith Chevalier Yale Did Not Answer
Bio/Vote History
         
Currie Janet Currie Princeton Uncertain 3
Bio/Vote History
         
Cutler David Cutler Harvard Agree 6
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 3
Bio/Vote History
         
Duffie Darrell Duffie Stanford Uncertain 7
The path of Inflation could be raised moderately over 5 years by this QE. The Fed has said as much, and probably wants a bit more inflation.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Uncertain 5
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Uncertain 3
Increase is unlikely to exceed 1-2 percentage points per annum. Is this inconsequel? I'm not sure how to interpret the word in this context.
Bio/Vote History
         
Fair Ray Fair Yale Agree 5
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Agree 6
Bio/Vote History
         
Goldin Claudia Goldin Harvard Agree 1
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Agree 6
Bio/Vote History
         
Greenstone Michael Greenstone Chicago No Opinion
Bio/Vote History
         
Hall Robert Hall Stanford Strongly Agree 7
Bio/Vote History
         
Holmström Bengt Holmström MIT Agree 5
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Disagree 6
Bio/Vote History
         
Judd Kenneth Judd Stanford Agree 5
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Agree 7
Only way this is incorrect is if the Fed ignores lots of warnings. Given current FOMC membership that risk is small.
Bio/Vote History
         
Klenow Pete Klenow Stanford Disagree 5 Bio/Vote History
         
Lazear Edward Lazear Stanford Uncertain 3
Bio/Vote History
         
Levin Jonathan Levin Stanford Did Not Answer
Bio/Vote History
         
Maskin Eric Maskin Harvard Did Not Answer
Bio/Vote History
         
Nordhaus William Nordhaus Yale Agree 8
Again, inconsequential is poor word choice. Surely less than 50 basis points per year.
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Uncertain 9
Depends what you mean by 'consequential.' I doubt there is a chance of inflation as high as 5% before the Fed tightens.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Agree 3
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Did Not Answer
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Strongly Agree 8
Bio/Vote History
         
Shin Hyun Song Shin Princeton Disagree 7
Bio/Vote History
         
Stokey Nancy Stokey Chicago Disagree 2
Bio/Vote History
         
Thaler Richard Thaler Chicago Agree 3
Inflation risk still seems low.
Bio/Vote History
         
Udry Christopher Udry Yale Agree 1
Bio/Vote History
         
Zingales Luigi Zingales Chicago Disagree 2
Bio/Vote History
         

Question C Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Agree 3
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Uncertain 1
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Uncertain 3
Bio/Vote History
         
Autor David Autor MIT No Opinion
Bio/Vote History
         
Baicker Katherine Baicker Harvard No Opinion
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Agree 2
Bio/Vote History
         
Chetty Raj Chetty Stanford Agree 5
Bio/Vote History
         
Chevalier Judith Chevalier Yale Did Not Answer
Bio/Vote History
         
Currie Janet Currie Princeton Agree 3
Bio/Vote History
         
Cutler David Cutler Harvard Agree 4
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 3
Bio/Vote History
         
Duffie Darrell Duffie Stanford Agree 9
Yes, it clearly has the tools, but will it use them quickly and aggressively, especially given the short-run cost in jobs? We may find out.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Agree 7
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 1
Bio/Vote History
         
Fair Ray Fair Yale Disagree 5
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Agree 6
Bio/Vote History
         
Goldin Claudia Goldin Harvard No Opinion
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Agree 7
Bio/Vote History
         
Greenstone Michael Greenstone Chicago No Opinion
Bio/Vote History
         
Hall Robert Hall Stanford Strongly Agree 9
There's no upper bound on the Fed's contractionary power--it can sell bonds and raise the interest rate on reserves, the latter sans limit.
Bio/Vote History
         
Holmström Bengt Holmström MIT Agree 6
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Uncertain 6
Bio/Vote History
         
Judd Kenneth Judd Stanford Agree 4
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Strongly Agree 10
Lots of ways to tighten and failure to do so would have to be an active choice.
Bio/Vote History
         
Klenow Pete Klenow Stanford Agree 5
e.g., the Fed phased out its liquidity lending facilities when the worst of the crisis passed.
-see background information here
Bio/Vote History
         
Lazear Edward Lazear Stanford Agree 6
Bio/Vote History
         
Levin Jonathan Levin Stanford Did Not Answer
Bio/Vote History
         
Maskin Eric Maskin Harvard Did Not Answer
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Agree 8
But recall that inflation is below Fed goal.
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Uncertain 8
Again depends on what 'substantially' means. There is some (uncertain) point at which long-term inflation expectations lose their anchor.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Agree 3
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Did Not Answer
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Strongly Agree 7
Bio/Vote History
         
Shin Hyun Song Shin Princeton Disagree 8
Bio/Vote History
         
Stokey Nancy Stokey Chicago Disagree 2
Bio/Vote History
         
Thaler Richard Thaler Chicago Agree 3
Bio/Vote History
         
Udry Christopher Udry Yale Agree 1
Bio/Vote History
         
Zingales Luigi Zingales Chicago Uncertain 5
The difference between can do it and will do it is a bit tricky when we are talking about the Fed
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

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