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Daniel L. Thornton

Economics & Finance

Daniel L. Thornton

Research Economist (1981–2014), Federal Reserve Bank of St. Louis

Daniel L. Thornton was a research economist at the Federal Reserve Bank of St. Louis from 1981-2014 and President of D.L. Thornton Economics LLC from 2014-2024.

Additionally, he was an adjunct scholar at the Cato Institute from 2014-2024, an adjunct faculty member at the Institut d´Economie Scientifique et de Gestion de Lille from 2014-2024, and a senior research fellow at Linndenwood University’s Hammond Institute for Free Enterprise from 2018-2024.

Dr. Thornton published over 100 articles in the Federal Reserve Bank of St. Louis Review and scholarly journals such as the Journal of Money, Credit, and Banking, the Journal of Banking and Finance, the Review of Financial Studies, and the Journal of Financial Economics. He was ranked in the top 3% of economists worldwide by Research Papers in Economics, RePEc.

He was the author of two blogs, Common Sense Economics, and Common Sense Economics, Perspectives.

Interview: Daniel L. Thornton On The Federal Reserve’s Response To The Collapse of Lehman Brothers, May 21, 2024.

Education
PhD Economics, University of Missouri-Columbia · MS Economics, Arizona State University · BA Economics, Parsons College
Topics
Monetary Economics · Macroeconomics · When Did the FOMC Begin Targeting the Federal Funds Rate? What the Verbatim Transcripts Tell Us · Federal Funds Rate Prediction · The Information Content of the Federal Funds Rate: Is It Unique? · MP Mischief and the Credit Trap · Open Market Operations and the Funds Rate · Predictions of Short-Term Rates and the Expectations Hypothesis · The Effect of Underreporting on LIBOR Rates · Money in a Theory of Exchange · The Effectiveness of QE: An Assessment of the Event Study Evidence · Monetary Policy Transparency: Transparent About What? · A Note on the Expectations Hypothesis at the Founding of the Fed · Identifying the Liquidity Effect at the Daily Frequency · Tests of the Expectations Hypothesis: Resolving the Campbell-Shiller Paradox · The Financial Crisis What Caused It and When and Why It Ended · Further Evidence on Greenspan's Conundrum

In the Encyclopedia1

Selected publications209

  1. 2020WSJ - If Inflation Starts, It will Be Hard to Corral, June 8, 2020
  2. 2020OpEd Letter Financial Times, August 6, 2020
  3. 2017First page 2017.06 Here's The Only Way to Prevent Too Big To Fail
  4. 2017First page 2017.07 Here's The Only Way to Prevent Too Big To Fail
  5. 2016The Effectiveness of Quantitative Easing August 20, 2016
  6. 2013“Why is Output Growth So Slow?” http://research.stlouisfed.org/publications/es/13/ES_4_2013-01-24.pdf
  7. 2013“Does the Economy Need More Spending Now?” http://research.stlouisfed.org/publications/es/13/ES_24_2013-08-20.pdf
  8. 2012“The Efficacy of the FOMC’s Zero Interest Rate Policy. ” http://research.stlouisfed.org/publications/es/12/ES_2012-09-04.pdf
  9. 2012“Quantitative Easing and Money Growth: Potential for Higher Inflation?” http://research.stlouisfed.org/publications/es/12/ES_2012-02-03.pdf
  10. 2012“The Efficacy of Monetary Policy: A Tale from Two Decades.” http://research.stlouisfed.org/publications/es/12/ES_2012-07-12.pdf
  11. 1990A Graph that Mimics the Governments Disastrous Policies Since 1990
  12. 1984“Monetizing the Debt.” A longer essay for more advanced students on Teacher background. http://research.stlouisfed.org/publications/review/84/12/Monetizing_Dec1984.pdf
  13. 1970“Tax Rates and Revenue Since the 1970s.” http://research.stlouisfed.org/publications/es/11/ES1124.pdf
  14. Greenspan's Connundrum and The Fed's Affect on Long-Term Yields
  15. Understanding the Predictability of Excess Returns
  16. Monetary policy: Why money matters (and interest rates don't)
  17. The Fed's Response to the Financial Crisis What It Did and What It Should Have Done
  18. The Federal Reserve's operating procedure, nonborrowed reserves, borrowed reserves and the liquidity effect
  19. Evaluating the Effectiveness of Monetary Policy
  20. Does Aggregate Supply Exist? Should We Care?
  21. Money Demand in Financially Sophisticated Economies
  22. Untangling Causes from Effects of the Financial Crisis
  23. Renewing America’s Prosperity
  24. Conundrum? Again?
  25. Structure Matters in Government
  26. What Will Happen if Greece Exits the Euro?
  27. The Fed's Lack of Confidence in the Economy's Healing Powers
  28. Why Has Economic Growth Slowed In China?
  29. Monetary Policy Insanity
  30. The Rain Man and the Fed's Ability to Control Interest Rates
  31. The Link Between Monetary Policy and Exchange Rates or Inflation
  32. Is the Fed Monetizing the Debt?
  33. What's Positive About Negative Interest Rates?
  34. Why the Fed's Zero Interest Rate Policy Failed
  35. The Fed's Monetary Policy: Excess Reserves, and Excessive Risk Taking
  36. My Scary Graph
  37. Will the Fed Raise Rates Before the Election?
  38. Why Larry Summers is Wrong About Slow Growth
  39. Is the Fed Waking Up to Reality?
  40. My Scary Graph Revisited
  41. Economic Theory and the BREXIT Question
  42. Another Unintended Consequence of QE
  43. The Fed Needs to Normalize Now
  44. Economic Growth Part 1
  45. Dissecting Yellen’s Jackson Hole Speech
  46. Dissecting Yellen’s Speech A Clarification
  47. Fixing Social Security
  48. The Feds Impending Inflation Disaster?
  49. The Feds Impending Inflation Disaster?: A Clairification
  50. Economic Growth: Does the Party of the President Matter?
  51. Fixing a Bad System
  52. The Fed Who Played With Fire
  53. Why We Need to End Too Big to Fail
  54. Policymakers Don't Understand the Money Supply Process
  55. Its Time to Change the Monetary Policy Debate
  56. The Limits of Monetary Policy Why Interest Rates Don't Matter
  57. The Limits of Monetary Policy Can the Fed Affect Interest Rates?
  58. The Limits of Monetary Policy Can the Fed Affect Output Growth?
  59. The Limits of Monetary Policy Things the Fed Cannot or Should Not Do
  60. What's All The Fuss about Bitcoin?
  61. Markets Needn't Panic About Normalization
  62. QE Was Effective: Show Me Your Evidence
  63. How and Why the Fed Stumbled into QE
  64. The Myth of Potential Output
  65. The Myth of Potential Output Revisited
  66. Congress Needs to Order the Fed to Stop Interest Rate Targeting
  67. The Folly of Negative Nominal Interest Rates
  68. Common Sense Reasons Interest Rates Don't Matter For Policy
  69. The Usefulness of Models for Economic Policy
  70. The Fed's 3.9% Unemployment Rate
  71. r-Star The Unnatural Natural Rate of Interest
  72. The Effect of the Fed's Policy on Output and Employment
  73. Congress Need to End the Charade and Fix Social Security
  74. Where is r-Star?
  75. What Monetary Policy Can Do
  76. Will the FOMC Adopt Nominal GDP Targeting?
  77. Its Important to Get It Right
  78. Understanding the Accelerating Deficit Debt Problem
  79. The Insanity of Government-Fianced Mortgages
  80. In Defense of Stephen Moores Nomination
  81. Pulling Back the Curtain on the Feds Mystique
  82. The Feds Monetary Policy Metamorphoses Past and Present
  83. Is There a Phillips Curve?
  84. A Question Policymakers Need to Answer
  85. The Fed's Rate Cut was a Mistake
  86. The Politicalization of the Fed and How to DePoliticalize It
  87. Protecting the Feds Independence Dudleys Way
  88. The Politicalization of the Fed Revisited
  89. What Really Fuels Economic Growth
  90. Alan Blinder's Odd Monetary Policy Recommendation
  91. The Fed Has Surrendered Its Independence
  92. Plutocracy
  93. Economic Growth 2.3% I Told You So!
  94. Again, Its Important to Get It Right
  95. On the Feds Ability to Affect Interest Rates
  96. The Feds Monetary Policy Reaches a New Low
  97. The Feds Road to Perdition
  98. Help Versus Economic Stimulus
  99. The Government Bailout What It Did and What It Should Have Done
  100. Hoarding TP Is More Rational Than You Think
  101. Monetary Policy What I Believe and Why I Believe It
  102. Requiem for Fed Independence
  103. Requiem for Fed Independence A Clarification
  104. Modern Monetary Theory and the Impending Financial Crisis
  105. Alan S. Blinder's Scarlett O'Hara Approach to the National Debt Problem
  106. The Feds Complicity in the Debt Problem
  107. The Economics of Making Wearing a Mask a Requirement
  108. Reasons to Question the Effectiveness of the Feds Interest Rate Policies
  109. Three Monetary Policy Questions My Answers
  110. Economic Growth Whats Politics Got to Do with It
  111. The Feds Bizarre New Longer-Run Monetary Strategy
  112. The Mystique of the All-Powerful Fed
  113. Trumps Economic Policies Unsuccessful When Evaluated Correctly
  114. Why Were the Pollsters So Wrong?
  115. WSJ Letter re Republican Party
  116. Requiem for Fed Independence No. 25
  117. Can The Fed Control Long Term Rates What the Facts and Theory Tell Us
  118. The US Deficit History - Just the Facts
  119. The US Deficit History - Just the Facts Revisited
  120. The Minimum Wage Don't Ignore the Science
  121. QEs Effect on Long Term Rates Its Not Working and Never Has
  122. The Feds Long Term Bond Buying Playing with Fire
  123. The Fed Has the Tools to Prevent Inflation. What Tools?
  124. The Problem With the Fed: Too Much Groupthink
  125. Will the Fed Create a Digital Dollar?
  126. Do We Need a Digital Dollar?
  127. The Fed's Folly
  128. The Feds Other Folly
  129. Economic Growth Monetary and Fiscal Policy Can't Help
  130. The Effectiveness of the Feds QE Policy
  131. Hanke and Hanlon's Nonsense Explanation for Inflation
  132. Alan Blinder's Epiphany
  133. Some Thoughts About Inflation and the Feds Ability to Control It
  134. Its Time the Fed Stops Using Core Inflation
  135. Core Versus Headline Inflation Again
  136. My Favorite Chart Revisited A Pyschics Dream
  137. The Effect of the Feds Interest Rate Hikes on Mortgage Rates
  138. What Does the Current Inflation Tell Us About Inflation Targeting
  139. The Effects of Inflation are Permanent The Optimal Rate of Inflation Is Zero
  140. The M2 Inflation Myth
  141. More Evidence the Fed Doesn't Affect Mortgage Rates
  142. A Litmus Test of Fed Independence
  143. Core versus Headline Inflation Revisited
  144. Revealing the Fed
  145. The Feds Financial Stability Report Card
  146. Debt Fact That Everyone Should Know
  147. The Anatomy of a Debt Default
  148. President Biden's Deficit Reduction Plan Won't Work
  149. The Effect of Changes in the Fed's Target on Interest Rates
  150. The Effect of the Fed's Target on Interest Rates A Clarification
  151. Will the Inflation Rate Increase?
  152. A Higher Inflation Target Is a Tired Old Idea
  153. Monetary Policy Makers and Advisors Need to Get Real
  154. Its Time the Fed Stopped Paying Banks Interest to Hold Reserves
  155. When Will the Fed Start Reducing its Rate?
  156. Higher Capital Requirements Wont Prevent a Financial Crisis
  157. Government Economists and Central Bankers Slept Through Econ 101
  158. The Feds Response to Inflation Was Anything But Aggressive
  159. The Reason the Fed Follows the Market
  160. What Is the Fed's Monetary Policy?
  161. The Financial Crisis and Unconventional Monetary Policy:
  162. “The Downside of Quantitative Easing.” http://research.stlouisfed.org/publications/es/10/ES1034.pdf
  163. “Can the FOMC Increase the Funds Rate Without Reducing Reserves?” http://research.stlouisfed.org/publications/es/10/ES1028.pdf
  164. “Housing and the "R" Word.” http://research.stlouisfed.org/publications/es/08/ES0805.pdf
  165. “The Effect of the Fed’s Purchases of Long-Term Treasuries on the Yield Curve.” http://research.stlouisfed.org/publications/es/09/ES0925.pdf
  166. “What Caused Long-Term Rates to Rise?” http://research.stlouisfed.org/publications/es/09/ES0932.pdf
  167. “Why Is Employment Growth So Low?” http://research.stlouisfed.org/publications/es/11/ES1137.pdf
  168. “Is the FOMC’s Policy Inflating Asset Prices?” http://research.stlouisfed.org/publications/es/11/ES1118.pdf
  169. “Has QE Been Effective?” http://research.stlouisfed.org/publications/es/article/10050
  170. “Is the FOMC’s Unemployment Rate Threshold a Good Idea?" http://research.stlouisfed.org/publications/es/article/9604
  171. “A Perspective on Possible Fed Exit Strategies.” http://research.stlouisfed.org/publications/es/article/9873
  172. “Verbal Guidance and the Efficacy of Forward Guidance.” http://research.stlouisfed.org/publications/es/article/9473
  173. “Would QE2 Have a Significant Effect on Economic Growth, Employment, or Inflation?” http://research.stlouisfed.org/publications/es/10/ES1029.pdf
  174. “Would Quantitative Easing Sooner Have Tempered the Financial Crisis and Economic Recession?” http://research.stlouisfed.org/publications/es/09/ES0937.pdf
  175. “Negating the Inflation Potential of the Fed's Lending Programs.” http://research.stlouisfed.org/publications/es/09/ES0930.pdf
  176. "Monetary Policy at the Zero Bound" https://research.stlouisfed.org/publications/es/article/8668
  177. The Fed’s Dual Mandate:
  178. “The Case for ‘Inflation First’ Monetary Policy.” http://research.stlouisfed.org/publications/es/09/ES0947.pdf
  179. “What Does the Change in the FOMC’s Statement of Objectives Mean?” http://research.stlouisfed.org/publications/es/11/ES1101.pdf
  180. “The Dual Mandate: Has the Fed Changed Its Objective? A longer essay for more advanced students on Teacher background. http://research.stlouisfed.org/publications/review/12/03/117-134Thornton.pdf
  181. Monetary Policy:
  182. “Measure for Measure: Headline versus Core Inflation.” http://research.stlouisfed.org/publications/es/07/ES0721.pdf
  183. “The Federal Funds and Long-Term Rates.” http://research.stlouisfed.org/publications/es/07/ES0710.pdf
  184. “The Fed’s Inflation Objective.” http://research.stlouisfed.org/publications/es/06/ES0615.pdf
  185. “Greenspan’s Unconventional View of the Long-Run Inflation/Output Trade-off.” http://research.stlouisfed.org/publications/es/06/ES0601.pdf
  186. “The Monetary Policy Transmission Mechanism?” http://research.stlouisfed.org/publications/es/05/ES0521.pdf
  187. “The FOMC’s “Considerable Period.” http://research.stlouisfed.org/publications/es/04/ES0403.pdf
  188. “Making Monetary Policy More Transparent.” http://research.stlouisfed.org/publications/es/04/ES0401.pdf
  189. “Alternative Policy Weapons?” http://research.stlouisfed.org/publications/es/03/ES0318.pdf
  190. “Predictability and Effectiveness of Monetary Policy.” http://research.stlouisfed.org/publications/es/03/ES0315.pdf
  191. “How Effective Is Monetary Policy?” http://research.stlouisfed.org/publications/es/03/ES0301.pdf
  192. Miscellaneous:
  193. “Are Virtual “Currencies” Likely to Succeed?” http://research.stlouisfed.org/publications/es/article/10092
  194. “What the Libor-OIS Spread Says,” http://research.stlouisfed.org/publications/es/09/ES0924.pdf
  195. “Monetizing the Debt.” http://research.stlouisfed.org/publications/es/10/ES1014.pdf
  196. “A Primer on the Mortgage Market and Mortgage Finance.” A longer essay for more advanced students on Teacher background. http://research.stlouisfed.org/publications/review/08/01/McDonald.pdf
  197. “Walter Bagehot, the Discount Window, and TAF.” http://research.stlouisfed.org/publications/es/08/ES0827.pdf
  198. “Is Nominal GDP Targeting a Rule Policymakers Could Accept?” http://research.stlouisfed.org/publications/es/article/9942
  199. “Social Security, Saving, and Wealth Accumulation.” http://research.stlouisfed.org/publications/es/05/ES0512.pdf
  200. “Public Officials and Job Creation.” http://research.stlouisfed.org/publications/es/04/ES0422.pdf
  201. “Withering Dissents.” http://research.stlouisfed.org/publications/es/02/ES0218.pdf
  202. The Federal Debt and Deficits:
  203. “The Federal Debt: Too Little Revenue or Too Much Spending?” http://research.stlouisfed.org/publications/es/11/ES1120.pdf
  204. “The Federal Debt: What’s the Source of the Increase in Spending?” http://research.stlouisfed.org/publications/es/11/ES1121.pdf
  205. “How Good Are the Government’s Deficit and Debt Projections and Should We Care?” A longer essay for more advanced students on Teacher background. http://research.stlouisfed.org/publications/review/12/01/21-40Kliesen.pdf
  206. Fiscal Policy:
  207. “Personal Saving and Economic Growth,” http://research.stlouisfed.org/publications/es/09/ES0946.pdf
  208. Link to all of Dr. Thornton’s Federal Reserve Publications:
  209. https://www.fedinprint.org/authors/daniellthornton.html

Positions & affiliations2

  • Federal Reserve Bank of St. Louis
  • Cato Institute