Tuesday, December 8th, 2015 9:51 am

US Interest Rates

Question A: The Fed should raise its target interest rate when it meets in mid-December.

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: The Fed should have raised interest rates sooner, rather than leaving them near zero for this long.

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 Agree 7
Persistent low interest create credit misallocation as in the runup to the global crisis. This has to be balanced against Keynesian factors.
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Agree 7
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Agree 3
Bio/Vote History
         
Autor David Autor MIT Uncertain 1
Bio/Vote History
         
Baicker Katherine Baicker Harvard No Opinion
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Disagree 6
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Uncertain 2
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Did Not Answer
Bio/Vote History
         
Chetty Raj Chetty Stanford Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Uncertain 5
Low labor force participation rate and inflation but uncertainty over when it will happen is bad.
Bio/Vote History
         
Cutler David Cutler Harvard Disagree 4
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 6
Bio/Vote History
         
Duffie Darrell Duffie Stanford Agree 8
The FOMC should raise, given no big interim adverse shocks, to mitigate inflation risk. The macro vital signs look healthy enough now.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Agree 6
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 5
This week's job data are enough to put me somewhat reluctantly in the agree column, though I would like to see more evidence of 2% inflation
Bio/Vote History
         
Einav Liran Einav Stanford Uncertain 3
Bio/Vote History
         
Fair Ray Fair Yale Agree 4
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Did Not Answer
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Agree 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Disagree 7
dangerous & loosening world. still no US inflation. reversal in near future would damage credibility of already credibility-deficited fed
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Disagree 5
where are price pressures? still a lot of people missing from the labor market. boogeyman of bubbles always lurks but where is she?
-see background information here
Bio/Vote History
         
Hall Robert Hall Stanford Disagree 9
The Fed has somewhat overstated the current level of the natural unemployment rate and fails to understand that it is falling.
Bio/Vote History
         
Hart Oliver Hart Harvard Disagree 5
I don't think so. The recovery is still weak and there are no serious signs of inflation. Also a little inflation may be good.
Bio/Vote History
         
Holmström Bengt Holmström MIT Agree 7
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Agree 8
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Agree 7
Bio/Vote History
         
Judd Kenneth Judd Stanford Uncertain 8
The Fed spends many 10^7 dollars annually on econ research. In mid-2008, the Fed did not think that a crisis was at hand. With my budget...
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Agree 8
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Strongly Agree 9
As Mike Mussa once famously said "if not now, when?".
Bio/Vote History
         
Klenow Pete Klenow Stanford Disagree 5
Inflation has fallen below the Fed's 2% target for over three years running, and is forecast to remain below for at least awhile.
-see background information here
Bio/Vote History
         
Levin Jonathan Levin Stanford No Opinion
Has more attention ever been paid to 25 basis points? We could amend the constitution with less fuss.
Bio/Vote History
         
Maskin Eric Maskin Harvard Disagree 5
Current inflation remains far below the target level
Bio/Vote History
         
Nordhaus William Nordhaus Yale Agree 9
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Agree 5
Bio/Vote History
         
Samuelson Larry Samuelson Yale Agree 8
The conventional wisdom is that the strong November jobs report clinches a rate increase, and I see no reason to disagree.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Agree 5
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Agree 3
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Uncertain 1
Bio/Vote History
         
Shimer Robert Shimer Chicago Strongly Agree 5
Bio/Vote History
         
Thaler Richard Thaler Chicago Uncertain 1
.25 bps doesn't matter much either way. It is the slope that matters. Go slow I say.
Bio/Vote History
         
Udry Christopher Udry Yale No Opinion
Bio/Vote History
         

Question B Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Agree 5
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Disagree 7
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Uncertain 3
Bio/Vote History
         
Autor David Autor MIT Disagree 3
Bio/Vote History
         
Baicker Katherine Baicker Harvard No Opinion
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Disagree 6
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Uncertain 2
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Did Not Answer
Bio/Vote History
         
Chetty Raj Chetty Stanford Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Disagree 3
Bio/Vote History
         
Cutler David Cutler Harvard Strongly Disagree 7
Bio/Vote History
         
Deaton Angus Deaton Princeton Disagree 6
Bio/Vote History
         
Duffie Darrell Duffie Stanford Disagree 8
It's been a close call. That the tradeoffs favored an earlier exit was not clear. Inflation was too low. Job creation was moderately good.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Disagree 6
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Disagree 9
Bio/Vote History
         
Einav Liran Einav Stanford Uncertain 3
Bio/Vote History
         
Fair Ray Fair Yale Disagree 4
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Did Not Answer
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Disagree 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Disagree 10
no way
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Strongly Disagree 5
fiscal policy was absent after the stimulus (see link) even today millions of potential workers are missing from the job market
-see background information here
Bio/Vote History
         
Hall Robert Hall Stanford Strongly Disagree 10
The Fed's job is to stabilize inflation, barring significant inflationary shocks, and inflation continues to run below any reasonable target
Bio/Vote History
         
Hart Oliver Hart Harvard Disagree 5
See answer to last question.
Bio/Vote History
         
Holmström Bengt Holmström MIT Disagree 3
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Agree 6
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Disagree 9
Bio/Vote History
         
Judd Kenneth Judd Stanford Uncertain 8
I cannot be more knowledgeable than the Fed.
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Agree 5
Delay in raising may have inflated asset prices.
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Agree 5
certainly would have voted to raise in september, there are always excuses to delay, time to put two way risk back into the bond market
Bio/Vote History
         
Klenow Pete Klenow Stanford Disagree 5
Bio/Vote History
         
Levin Jonathan Levin Stanford Disagree 1
Bio/Vote History
         
Maskin Eric Maskin Harvard Disagree 7
Inflation was low and the recovery was weak---low interest rates seemed indicated.
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Disagree 9
Note that this does not allow for those who think should be later. Survey bias.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Strongly Disagree 6
Bio/Vote History
         
Samuelson Larry Samuelson Yale Disagree 6
Inflation has been surprising dormant, so there appear to have been few adverse consequences of prolonged low rates.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Disagree 7
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Uncertain 4
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Disagree 1
Bio/Vote History
         
Shimer Robert Shimer Chicago Agree 5
But only two meetings ago, in October
Bio/Vote History
         
Thaler Richard Thaler Chicago Disagree 8
Congress gave them no choice. We should have been borrowing at negative r and building infrastructure. And no inflation in sight.
Bio/Vote History
         
Udry Christopher Udry Yale No Opinion
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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