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Ruffer Review 2021

Additional references
Jamie Dannhauser, Economist
The deflation machine – back from the dead?
  1. Before the 2008/2009 financial crisis, this shortfall in global demand is linked to what has become known as the global savings glut. In this view, most often ascribed to Ben Bernanke’s March 2005 speech: “The global saving glut and the US current account deficit”, powerful forces were boosting the world’s desire to save relative to its desire to invest. Those forces acted to distort the pattern of spending between countries, evidenced by historically large trade imbalances. The net result was a persistent ex ante lack of demand. Larry Summers has also been a strong proponent of this view in recent years. Since the crisis, depressed aggregate demand is more frequently linked to balance sheet repair in those countries and sectors at the epicentre of the financial collapse, although these descriptions of recent economic events are often elided together
  2. The arguments extend their earlier, more compact analysis, Goodhart & Pradhan (2017), “Demographics will reverse three multi-decade global trends”, BIS Working Paper No. 656
  3. Subramanian & Kessler (2013), The hyperglobalization of trade and its future, Peterson Institute of International Economics Working Paper 13-6
  4. This supply-side interpretation of low inflation globally is central to the view of Claudio Borio and the Bank for International Settlements, which has profoundly shaped how we think about the economic system and the operation of financial markets. Borio and his colleagues have done more than anyone to illuminate the actual forces driving the world economy and financial system in recent decades. The following research reports, available from bis.org, are all exemplary pieces of analysis that should be required reading for anyone involved in markets: Borio (2019), BIS Working Paper 829; Borio, Disyatat & Rungcharoenkitkul (2019), BIS Working Paper 777; Auer, Borio & Filardo (2017), BIS Working Paper 602; Borio (2014), BIS Working Paper 456; Borio & Disyatat (2011), BIS Working Paper 346
  5. The conclusions of that review, changes to the FOMC’s formal statement regarding its goals and policy strategy and a slug of analytical research have been released into the public domain. See federalreserve.gov/monetarypolicy/review-of-monetary-policy-strategy-tools-and-communications.htm and related links
  6. Friedman’s views on monetary policy are best encapsulated by his 1968 American Economic Review article “The role of monetary policy” miltonfriedman.hoover.org
  7. There is considerable evidence that the Phillips curve is alive and well, especially in the kind of environment the Fed has promised to bring about, namely an overheating economy when unemployment is below the NAIRU. See, for instance, Nalewaik (2016), “Non-linear Phillips curves with inflation regime-switching”, Finance & Economics Discussion Paper 2016-078 (federalreserve.gov); or Hooper, Mishkin & Sufi (2019), “Prospects for inflation in a high pressure economy: Is the Phillips curve dead or is it just hibernating?”, Research in Economics Volume 74 Issue 1 (sciencedirect.com). This literature also stresses that the background inflation regime has a profound impact on how a given level of unemployment (specifically, the unemployment gap) impacts inflation. Our argument is that the low-inflation regime since the 1980s is not primarily a function of good central bank management, but instead is down to structural forces that look set to dissipate and plausibly reverse in the years ahead
  8. Akcigit & Ates (2020), Slowing business dynamism and productivity growth in the United States, Kansas City Fed (kansascityfed.org)
Andrew van Biljon, Research Director
Navigating information
  1. Tom Lamont (2020), Can we escape from information overload? The Economist
  2. Claude E Shannon and Warren Weaver (1949), The mathematical theory of communication, Urbana, Illinois, University of Illinois Press
  3. Paige Cooper (2020), 25 Twitter stats all marketers need to know in 2020, Hootsuite.com
  4. Gregory Zuckerman (2019), The Man Who Solved the Market, Portfolio/Penguin
  5. David Tong (2018), Gauge Theory, University of Cambridge
  6. Biswa Sengupta, Arturo Tozzi, Gerald K Cooray, Pamela K Douglas, Karl J. Friston (2016), Towards a neuronal gauge theory, PLoS Biology
  7. Karl J Friston (2010), The free energy principle: a unified brain theory? Nature Reviews Neuroscience
  8. Karl J Friston, Thomas Parr, Peter Zeidman, Adeel Razi, Guillaume Flandin, Jean Daunizeau, Ollie J Hulme, Alexander J Billig, Vladimir Litvak, Rosalyn J Moran, Cathy J Price, Christian Lambert (2020), Dynamic causal modelling of covid-19, Wellcome Open Research
London
80 Victoria Street
London SW1E 5JL
Edinburgh
31 Charlotte Square
Edinburgh EH2 4ET
Paris
103 boulevard Haussmann
75008 Paris, France