Thursday, December 29, 2011

Interest Rate Stays Put

央行決定維持利率不變

前天本來想提出我自己的想法,不過想想我沒有做預測的必要,所以還是等事情發生了以後再評論。我的看法是此時不宜調降利率,因為目前的經濟情況不是調降利率可以改善的。以現在利率的低水準,調降一碼半碼大概唯一的用處是讓股市明天漲一天,然後下個星期大家都忘記曾經發生過什麼事情。

利率降低對目前來講最大的用處在於流動性,不在於提振景氣。不過目前短期市場利率和隔夜拆款利率都在相對低檔,因此如果沒有調升利率的需要就按兵不動最好,調降是不必的。台灣的經濟對於進出口貿易倚重甚深,如果歐美需求不振,我們怎麼降息也沒有用。增加內需要改變整體經濟結構,不是說增加就能增加。由於政府負債最近幾年增加的很快,財政政策的施行也要非常謹慎,不能再以為錢是公家的,怎麼用也用不完。沒有自償能力或者沒有很大正面外部性的賠錢計畫,現在也不適合執行。換句話說,現在政府對於景氣能做的事情非常有限,充其量只是在分配上面謹慎處理以減輕國民在不景氣時候的痛苦。

這一期的今週刊有兩篇批評央行政策的文章引起不少人的注意(揭開央行賺錢神話一本雜誌竟把「8A總裁」捧上天)。類似的批評我在兩三年前上課就開始談了,這不是新問題。有興趣的人請參考下面兩篇文章:

陳旭昇,吳聰敏 (2008) 台灣匯率制度初探,經濟論文叢刊 36:2, 147-182.
陳旭昇,吳聰敏 (2010) 台灣貨幣政策法則之檢視,經濟論文 38:1, 33-59.

我在念碩士班的時候吳老師教我們總體,我出國唸書三封推薦信之一是他寫的。前面有人連在 comments 裡面都對自己的消息來源和自己的投資做 full disclosure,我在這裡當然也把話說清楚。這兩篇文章都是學術論文,可受公評。不管大家對這兩篇文章的結論同意與否,我個人相信陳吳兩位在學術上的 integrity。

彭淮南總裁的功過我們等他卸任以後一段時間再說。Alan Greenspan 一度被捧的老高,但是在次級房貸風暴之後他被許多人當作過街老鼠。彭的匯率政策到底是功是過恐怕將來他卸任後仍然不易說清。以台灣的產業形態來講,如果不是這種阻升不阻貶的政策精神,很多 profit margin 很低的公司可能幾次匯率大幅波動他們就出局了。歷史不能重來,所以我們也不知道如果真的放手讓匯率反應正常經濟實力,是不是會逼迫台灣產業轉型,而這轉型能否成功更在未定之天。

相較於匯率政策,彭的利率政策應該是比較失敗的。說失敗也許並不恰當,因為他並沒有把利率當作央行政策的首要目標,匯率才是。對現代央行來說,除了那些刻意操控匯率的國家之外,這樣的政策目標是個異數。在這個 blog 我談過三、四次 impossible trinity。如果央行要對匯率做出某種程度的控制,又不打算嚴格管制資金進出,在利率上面當然就會綁手綁腳。國內這幾年資產價值高速成長,特別是房地產價格高漲,央行的利率政策雖然不是罪魁禍首,也不能說沒有責任。由於台灣媒體和政客習慣將股市跟施政表現連結在一起,所以維持低利率變成了央行面對民選政府的政治正確。這幾年股市表現沒有因為低利率而一飛衝天,倒是房地產價格越飆越高,以前的政治正確將來是不是會被一般人另眼看待,我們可以繼續觀察下去。

央行的鉅額外匯存底孳息能夠為彭總裁帶來的大概只是在列席行政院院會時聲音可以大些,也許讓他在面對行政院長的時候政治份量更高一點。下一任的央行總裁將是在央行不被認為是獨立機關的情況下任命的,我對未來的發展其實更擔心。以央行的收入來講,他們事實上成為了台灣最賺錢的『國營事業』,這的確不是一件健康的事情。如果明年改選出來的新政府不尊重央行的預算和人事權,對於我國經濟體系的穩定會造成很大的危險。

昨天遇到一位大學學長,聊到今天央行理監事會議是否會調降利率一事,我們兩個人都反對,不過他對於央行會否因總統大選將即而調降利率表示擔心。我昨天的猜測是不至於,因為即使調降最多也只調一碼,搞不好還只調半碼。最近 ECB 那種大動作都不能讓股市連漲個幾天了,調降半碼一碼大概最多就是反應一天而已。話雖這麼說,我其實也沒有百分之百的把握政治力量會否對央行決策造成影響。彭總裁應該了解降息對於股市的用處有限,今天才只是 12/29,離選舉還有兩個多星期,到那時降息的效果早就消失無蹤了。

彭的功過不管如何論定,他還是高調主張央行獨立性的總裁。等到大後天行政院組織法修正案正式實施後,中央銀行和金管會連形式上的獨立機關都不是了。如果政治人物不知多所節制,台灣的金融秩序將來還有得亂的。

10 comments:

Ben said...

Before I comment, I would like to apologize profusely that all my comments have been in English. The fact is - I can't write Chinese very well(if that!) and don't even know how to input Chinese characters with a computer keyboard. I am embarrassed to say that this is entirely a result of years of neglect and laziness. I only wish I could write Chinese with 1/10 the fluency that CCLu has shown with his English.

Moving on to all things financial, I really enjoy this post because it allows me to get a glimpse of the issues facing Taiwan's economy today and Taiwan Central Bank's policy choices. A few follow-up questions for CCLu if I may:

- Are you suggesting that Taiwan's Central Banks are not as politically independent as the U.S.?
- Are things changing in a few days that will make Taiwan's Central Bank even less independent?
- If I understood your post correctly, Taiwan's Central Bank has a history of using interest rate and foreign reserve to weaken NT Dollar, in an effort to artificially enhance Taiwan's export competitiveness. Isn't this a variation of financial oppression that tends to hurt the working class the most?
- You mentioned that housing prices have gone up meaningfully in the last few years. Why hasn't the property bubble popped yet? How will the younger generation ever be able to buy a home in Taipei on a US$12,000 a year salary?

As always, thanks for sharing your thoughts with us.

CCLu said...

To Ben,

1. Central Bank in Taiwan enjoys certain degree of independence in the past two decades. It is hard to quantify this degree of political independence because we sometimes cannot tell whether a central banker has a specific political agenda to serve or he/she is just simply incompetent. One important fact is that the budget of the Central Bank in Taiwan has to be approved by the Legislative Yuan, after being carefully reviewed by the Executive Yuan. The Federal Reserve, on the other hand, is independent of Congressional decisions about appropriations.

2. The latest amendments of the organic law of the Executive Yuan (行政院組織法修正案) will become effective on 1/1/2012. Both the Central Bank and the Financial Supervisory Commission (our version of SEC) will not be recognized as an independent agency.

3. Yes, our Central Bank keeps Taiwan Dollar cheap and interest rate low as far as they can. They still have to be careful not to arouse U.S. accusation of exchange rate maneuver or to avoid high inflation rate though. It is hard to say how much "harm" they did to the working class because those workers might otherwise lose their jobs to foreign workers. I don't have an answer to that question.

4. No one knows when the bubble will burst. Prof. Eugene Fama went as long as saying there is no such thing as a bubble because you cannot accuse something too expensive without being able to tell what the fair price is. I think it is safe to say when everybody thinks this time is different, it is the time the bubble bursts. The housing "bubble" in Taiwan is mostly a Taipei metropolitan phenomenon. Since Taipei is where the jobs are, I don't think the housing price will collapse as some people believe or hope to believe. And you are right, average youngsters cannot afford to own a decent apartment in Taipei. However, how many 30-something can buy a condo in the New York City without working for a big law firm or an investment bank?

Thanks for your inputs. There's no doubt we can learn something new from other people's insights or opinions. Sometimes we learn just as much from answering questions because we might organize our thoughts in a way we have never done.

Ben said...

>>However, how many 30-something can buy a condo in the New York City without working for a big law firm or an investment bank?<<

I see your points, CCLu. However, housing prices, in Asia, have never made much sense to me. I understand that Asians, in general, are very fond of real estate assets; my own mother loves to buy real properties for as long as I can remember.

A few data points for us to chew on:

1. NYC had a median home value to median household income ratio around 10. For the state of New York, the ratio was about 5.5. This data set is somewhat outdated (from 2005 to 2009) but shouldn't be too far off today.

http://quickfacts.census.gov/qfd/states/36/3651000.html

2. Taipei had a median home value to median household income of 14.3 during 4Q 2010, while the rest of Taiwan had a ratio of 8.9 during the same period. Granted that housing prices in Taipei and Taiwan are quite volatile and these ratios can change quickly from quarter to quarter.

http://www.taipeitimes.com/News/biz/archives/2011/03/29/2003499346

And here is the kicker - the median home value to median household income ratio for the entire USA was only 3.7!

http://quickfacts.census.gov/qfd/states/00000.html

I am aware that there are other factors involved here. For one, the property taxes are substantially higher in the US than in Taiwan. But there are also a couple other factors working against Taipei and Taiwan:

- NYC is a global destination city. Taipei is not.
- Taiwan will most likely experience negative population growth in the coming decade. The US will not.

I have no idea if/when Taiwan's housing market will collapse(although I believe that China's will if it hasn't started already). But the facts and numbers simply don't add up for me. Then again, you know what Keynes once said - the market can remain irrational longer than you can remain solvent.

Thoughts?

CCLu said...

To Ben,

I want to clear one thing first. When I said the New York City, I only meant Manhattan. I am a Columbia alumnus so I'd like to draw comparison to Manhattan any chance I've got and ignore the other part of the city. I'm biased, guilty as charged.

I agree that the housing price in Taipei or the whole Taiwan is high when we compare it to the household income, but that is not the only thing to determine the price.

You made a brilliant point: the relation between the population growth of a city and its real estate price tag. A colleague of mine just told me that the population of age 16-65 seems to be a leading indicator of the housing price. Tokyo is a good example to showcase the impact of aging population on the real estate market.

However, if a young couple cannot find the job they want in New York, presumably in the financial industry, they can try their luck elsewhere, maybe Chicago, or Boston. If a 26 year old who majored in finance wants an equity-related job (maybe a stock analyst), she probably has to stay in Taipei, otherwise she'll have to try her luck in other countries or other kind of banking jobs. Taipei is not a global destination like New York is. Other than London, no place can compare to New York in this regard. However, there are also less alternatives in Taiwan, so the demand of housing in Taipei can remain high up to this point.

The high housing cost squeezes a household's disposable income, so we see more double-income families nowadays. This complicates matter further because it makes it tougher for the family to relocate. A city with abundant and diverse job opportunities will remain attractive more so than ever.

Putting all these together, I'd assume the housing price in Taipei would decline, but it takes a huge negative shock to have it totally collapse. If the opportunities are still in Taipei, it's the housing price in other cities will collapse first.

YMMN said...

盧老師您好,我不是學經濟的,我的業餘看法,如有謬誤,請見諒
1.央行的首要職掌是穩定物價.
2.當主要競爭國家都做貨幣干預時,如果台灣國內CPI可以照顧到WORKING CLASS情況下,匯率如果不採阻升不阻貶,會不會傷害到台商競爭力.
3.張忠謀先生已對貶幅有微詞,而這幾年台灣出現稍具競爭能力的公司(台積電,宏達電,華碩,宏碁..)問題是不是已變成要不要像韓國一樣做快速的反應,不做這種動作,台商有沒有匯率上的競爭力.如果快速反應匯率,會不會違反央行的首要職掌.
4.GREENSPAN被貶是因為他長期用低利率來救經濟(泡沫?1987,LTCM,NET BUBLLE),更讓人詬病的是對金融監理採放任的態度,同時認為某些金融創新(衍生性商品)會有自我修復的能力.台灣好像也有低利率的問題,但這是不是有我下面提的外部因素,而金融監理跟救市的問題,彭總好像沒有做過大規模救市的動作,或者說不是他在救的.
5.台美約有1%的利差,如果這個利差擴大,會不會更吸引外資把錢匯來台灣賺利息,利差,升值,同時又推升了資產價格.

Ben said...

>>I am a Columbia alumnus so I'd like to draw comparison to Manhattan any chance I've got and ignore the other part of the city. I'm biased, guilty as charged.<<

Now I know why you disliked the documentary "Inside Job." :))

I thought the film was too one-sided and didn't provide enough counterpoint views. However, Columbia B-school did come off looking pretty bad, and Mishkin in particular. The segment on Mishkin "mistyping" the title of his "(in)stability of Icelandic Economic System" paper on his resume was especially damaging. If the typo were proven intentional, there could be enough ground for dismissal. Hubbard didn't fare much better in the film either.

I don't know what the producers of the documentary did to get Columbia to grant such in-depth interviews, but I have a feeling that Columbia B-school administration was misled to a certain degree.

CCLu said...

To YMMN,

1. 這是我們目前的共識,不過這個觀念的歷史只有大概三十年左右。

2. 我在文章裡提到了一些事實,不過我並沒有像今週刊一樣對彭總裁提出指責,主要的原因在於他做的事情將來不見得會被認定是對的,但是在沒有 20-20 hindsight 的情況下,我們其實也可以幫他的作為找到一些理由。如果說最近的討論有什麼價值,那就是彭並不是神。

3. 重點不是『央行反應匯率』,是央行要不要干預匯率。如果讓匯率自由浮動,反應是會蠻快的。

4. 金融監理和金融創新我倒不會給 Greenspan 太多的指責,那些東西不是所有人都能看得清楚。連許多投資銀行的 CEO 和 Chair 都不懂,Greenspan 他老人家如果沒看到不能太責怪他。低利率的政策會是我主要的論點,他在那部份沒作好。

5. 那還要看預期匯率。如果賺利率賠匯率也沒有用。

CCLu said...

To Ben,

I sat in both Mishkin's and Hubbard's class for the whole semester, so I have some first hand experience of them.

According to friends closer to Mishkin, he left the Fed because he was hawkish than others and he was minority at the time. He didn't want to jeopardize his friendship with Bernanke but he also wanted to keep his integrity. Leaving the Fed Board was the right thing to do. This is not something he can say in that interview. I don't doubt his integrity. That documentary made a big deal of conflict of interests in academia, which is a moo point to me. We never judge a book by its cover or a paper by its title. Yes, a paper with a good title can draw some extra interests, but it's not that important. No matter it was instability or stability on the title, what's important to academia is how he reaches his conclusion and what his conclusion is. That title doesn't mean as much as the documentary implied.

Hubbard was one of the nicest person I ever met at B-School. I didn't agree with his view of tax cut back then, but he was very persuasive. Arguing with him is a very frustrating thing because he can always find tons of theories or empirical results to back himself up. No matter how much I believe I was right, he always made better arguments.

He was dean of CU B-School for a while, so whatever deal they made with the producer came through him. I can understand why he felt cheated at the end of his interview. When it comes to non-economic issues, he isn't as smart and articulate as I thought he is. Same goes to Mishkin. These professors talk much more smoothly when they discuss economic issues.

I didn't care whether Mishkin disclosed that $100,000 payment from Iceland. First of all, that's not a big money to get someone in his caliber to do a non-academic research. We all know he has to get paid to do that and this price tag falls on the low end for him. With or without the full disclosure, we still look at the methodology of his research and the data he collected. Then look at whether the evidence leads to his conclusion. We are in a discipline which is normal to have different opinions over the same thing. It would be nice to reveal those potential conflict of interests to general public because that is how real world works. I don't think it matters in academia though.

Ben said...

I knew that you would have some insider perspectives on this topic. Interesting insights, but I think we have slight divergence of opinions here.

>>According to friends closer to Mishkin, he left the Fed because he was hawkish than others and he was minority at the time. He didn't want to jeopardize his friendship with Bernanke but he also wanted to keep his integrity. Leaving the Fed Board was the right thing to do.<<

That's a key problem at the Fed and in many corporate boardrooms these days. They have become too much a good old boy/gal country club. Everyone wants to get along and nobody wants to rock the boat. Fed Governors are there to serve in the best interest of the citizens of the United States. If Mishkin felt strongly that a loose monetary policy was not in the best interest of American people, he should have stayed and fought for his ideas and views. What is more important? His friendship with Bernake or the well-being of his fellow Americans. I am not doubting his integrity one bit, but I do question his priority.

>>We never judge a book by its cover or a paper by its title. Yes, a paper with a good title can draw some extra interests, but it's not that important. No matter it was instability or stability on the title, what's important to academia is how he reaches his conclusion and what his conclusion is. That title doesn't mean as much as the documentary implied.<<

I agree that we should never judge a book by its cover. I never read that paper so I have no idea what it contained. However, if I were to tell you that Mishkin's resume had listed the paper as "Stability of Icelandic Economic System" BEFORE Iceland blew up. But after Iceland's collapse, the title suddenly was changed to "Instability of Icelandic Economic System." without explanations on his resume. Would you consider that an ethical move by Mishkin?

>>I didn't care whether Mishkin disclosed that $100,000 payment from Iceland. First of all, that's not a big money to get someone in his caliber to do a non-academic research. We all know he has to get paid to do that and this price tag falls on the low end for him. With or without the full disclosure, we still look at the methodology of his research and the data he collected. Then look at whether the evidence leads to his conclusion.<<

But it is really bad optics for a major education institution like Columbia. I think Columbia B-school has since changed its disclosure policy on outside consulting projects done by their professors.

>>>We are in a discipline which is normal to have different opinions over the same thing.<<<

Right on!! And that's why it was always puzzling to me that almost all the Fed's decisions under Greenspan were "unanimous." I give Bernake a lot of credit for allowing the dissenters' voices to be heard.

"Inside Job" tried to make the professors look like evil genius (which they are certainly not) who were in bed with the private sector and out to screw the world. They did it for theatrical effect and unfortunately, they may have succeeded.

CCLu said...

To Ben,

Yes, I agree with you. I was too pissed off by that documentary when I mentioned it that I almost forgot I was not a fan of Mishkin. He's not mean. I would put him about average when it comes to personality among those CU faculty members I know. Glenn Hubbard is a super nice guy. Mishkin? not so much.

I have no idea what really happened about that resume thing. Even if the title was "Stability of Iceland Economic System", the report can still argue lack thereof, so I don't think that matters much. I understand this is probably just me, so I'll leave it at that.

I also agree with your comment on board culture. A frat atmosphere in the board is not going to do the firm or the Fed any good.

I think it is a good idea to have full disclosure of outside funding to the public because we economists only constitute a small proportion of total population. We know what's going on does not mean everybody should know what is behind the curtain.

I've got something about those unanimous decisions in the Greenspan era. People did have different opinions. It is Greenspan who had this uncanny ability to persuade people to change their mind, or at least their vote. There were a lot of discussion under the scene for those unanimous votes. I think I heard this story in a macro seminar sometime in 2001 or 2002. I just remember it was winter, and I couldn't recall who the lecturer was, only he's an insider.