September 08, 2010
The "Ever-Expanding" Government Sector, Illustrated
Just some numbers to bring reality into the general discussion:
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Posted by Menzie Chinn at 08:40 PM permalink | Comments (62) | digg this | reddit
The Budgetary Impact of EGTRRA/JGTRRA Extension and AMT Fixes
...According to the CBO
In evaluating the advisability of extending either completely or partially the tax cuts of 2001 and 2003 (aka EGTRRA and JGTRRA), and implementing additional fixes to the AMT, one should consider the impact on the budget.
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Posted by Menzie Chinn at 07:25 AM permalink | Comments (9) | digg this | reddit
September 04, 2010
Snapshots of the Employment Situation, August 2010
I thought I'd add a few observations on the latest employment report (other reports here: [NYT], [WSJ RTE/Izzo] [CR], [Economist's View]). First, by an alternate measure, employment is improving more rapidly than the standard nonfarm employment (NFP) measure. Second, the alternate measure increased faster than nonfarm payroll employment over the period of temporary Census hiring. Third, aggregate hours worked in the private sector continues to rise faster than private sector employment. Fourth, the NFP growth consistent with zero GDP growth is lower in the last decade, versus previous decades, even while the elasticity of NFP growth with respect to GDP growth has risen.
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Posted by Menzie Chinn at 12:35 PM permalink | Comments (21) | digg this | reddit
September 03, 2010
August auto sales
August auto sales worst in 27 years, declared some headlines. While the statement may be true, I don't think it's the best way to summarize what we're seeing.
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Posted by James Hamilton at 05:33 AM permalink | Comments (15) | digg this | reddit
September 01, 2010
What Kind of Model Is Brian Riedl Using?
If one wants to be taken seriously in the world of policy analysis, one should at least use an internally consistent framework. This consideration, apparently, has not troubled Mr. Reidl.
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Posted by Menzie Chinn at 08:55 PM permalink | Comments (36) | digg this | reddit
August 31, 2010
Policy tools that could lower interest rates further
Even though the overnight interest rate has been stuck near zero for 20 months, are there options available to the Federal Reserve or the U.S. Treasury to bring longer-term yields down further? I have been looking into this question with Cynthia Wu, an extremely talented UCSD graduate student. We present our findings in a new research paper, some of whose results I summarize here.
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Posted by James Hamilton at 03:51 PM permalink | Comments (40) | digg this | reddit
August 30, 2010
What Can Sustain GDP Growth? Open Economy Version
With the consumer in the doldrums, residential investment unlikely to rebound in the near future, and government stimulus constrained by political gridlock, it's hard to see where the sources of aggregate demand will be. I'm going to extend Jim's search for silver linings in the latest GDP release.
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Posted by Menzie Chinn at 05:14 PM permalink | Comments (34) | digg this | reddit
August 29, 2010
New database on the maturity structure of publicly-held debt
I have been working on a project with UCSD graduate student Cynthia Wu to try to assess the potential for the Federal Reserve to continue to influence long-term interest rates even when the short-term interest rate is essentially at zero. I'll be relating the conclusions from that research in a few days. But first I'd like to call attention to a new data set that we developed on the maturity structure of publicly-held debt which may be of interest to other researchers. As Paul Krugman likes to warn, this one is just for the wonks.
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Posted by James Hamilton at 06:35 AM permalink | Comments (19) | digg this | reddit
August 27, 2010
GDP revised down
The Bureau of Economic Analysis, which last month had estimated that U.S. real GDP had grown at a 2.4% annual rate during the second quarter, today revised that estimate down to a 1.6% annual rate. But the revision isn't quite as discouraging as it might sound.
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Posted by James Hamilton at 04:53 PM permalink | Comments (30) | digg this | reddit
August 26, 2010
A quantitative assessment of the scientific consensus on anthropogenic climate change
From the abstract to the paper:
... we use an extensive dataset of 1,372 climate researchers and their publication and citation data to show that (i) 97-98% of the climate researchers most actively publishing in the field support the tenets of ACC outlined by the Intergovernmental Panel on Climate Change, and (ii) the relative climate expertise and scientific prominence of the researchers unconvinced of ACC are substantially below that of the convinced researchers.
Posted by Menzie Chinn at 10:16 PM permalink | Comments (94) | digg this | reddit
August 25, 2010
More thoughts on what to expect from the Fed
There is disagreement within the FOMC. How will it be resolved?
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Posted by James Hamilton at 03:49 PM permalink | Comments (28) | digg this | reddit
August 24, 2010
Kevin "Dow 36,000" Hassett* Speaks on "Keynesian Economics"
From Bloomberg:
The biggest Keynesian stimulus in U.S. history was a bust.
Incredibly, some Keynesians who supported Barack Obama's $862 billion stimulus now claim it fell short of their goals not because the idea was flawed, but because the spending package was too small.
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Posted by Menzie Chinn at 06:05 PM permalink | Comments (82) | digg this | reddit
August 22, 2010
Long-term perspective on the stock market
Nobody can tell you for sure what's going to happen next in the stock market. But thanks to the nice data set collected and maintained by Yale Professor Robert Shiller we can speak with authority about what it's been doing for the last 140 years.
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Posted by James Hamilton at 01:00 PM permalink | Comments (42) | digg this | reddit
August 19, 2010
The June Trade Release: A Clash of Narratives
The recent trade release for June sparked some consternation, as it indicated 2009Q2 2010Q2 growth, conditional on data already released, would be lower. But there was also some unhappiness as it was taken by some to mark the return of the spendthrift consumer.[0] Yet, everywhere I see discussion of how consumption is lackluster, because households are deleveraging and beset by uncertainty. [1] These two narratives clash. Which one is right?
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Posted by Menzie Chinn at 01:51 AM permalink | Comments (21) | digg this | reddit
August 18, 2010
Will the Fed do more?
If conditions deteriorate further, I believe the answer is yes.
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Posted by James Hamilton at 07:54 AM permalink | Comments (32) | digg this | reddit
August 16, 2010
Financing U.S. Debt
Is There Enough Money in the World -- and At What Cost?
From the abstract of a paper coauthored with John Kitchen:
This paper examines the potential role for foreign official holdings of U.S. Treasury securities and the associated implications for Treasury security interest rates, international portfolio allocations, net international income flows, and the U.S. net international debt position, using a baseline outlook of current and projected U.S. budget deficits and growing debt. ...
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Posted by Menzie Chinn at 02:01 PM permalink | Comments (26) | digg this | reddit
August 14, 2010
Escape from arbitrage: the movie
Two of my favorite economists, Bilkent University Professor Refet Gurkaynak and Johns Hopkins University Professor Jonathan Wright, have a nice new paper in which they survey macroeconomic theories of the term structure of interest rates. As an unusual digital supplement to their paper, they put together a movie in which you can watch the arbitrage glue that normally holds markets together start to fail as financial markets literally fell apart at the end of 2008.
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Posted by James Hamilton at 11:23 AM permalink | Comments (10) | digg this | reddit
August 13, 2010
Chinn-Ito Capital Account Index up to 2008
The Chinn-Ito de jure capital account index (previously discussed here and here) is now available, up to 2008. The data and accompanying documentation is all available here.
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Posted by Menzie Chinn at 05:36 PM permalink | Comments (4) | digg this | reddit
August 12, 2010
Persistent Large Output Gaps, Disinflation and Deflation
Or, what if the Accelerationist hypothesis doesn't hold. I'm sure this question will drive some apoplectic -- but I think it a reasonable question. First, let's look at the empirical evidence on what happens to inflation in the wake of persistent large output gaps. Fortuitously, Andre Meier has just written on this subject, in Still Minding the Gap:
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Posted by Menzie Chinn at 07:32 AM permalink | Comments (17) | digg this | reddit
August 11, 2010
Ever so slightly less contractionary
What is the significance of yesterday's statement from the FOMC?
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Posted by James Hamilton at 08:37 AM permalink | Comments (35) | digg this | reddit
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