November 19, 2009
China, the Renminbi, and Global Imbalances: A Quantitative View
President Obama's trip to China has returned to scrutiny the role of China's currency and macroeconomic policies in perpetuating global imbalances. [0] [1] [2]
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GDP: Revisions and Forecasts
There's been some discussion of how the GDP estimates for 2009Q3 might be revised downward in light of the September trade release [1]. e-Forecasting has presented its latest estimates up to October, and Macroeconomic Advisers through September. Macroeconomic Advisers writes:
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November 18, 2009
Receiver operating characteristics curve
Travis Berge and Oscar Jorda of the University of California, Davis have an interesting new paper on statistical criteria for distinguishing economic expansions from recessions.
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November 16, 2009
Assessing the Impact of Government Policy on Widget Consumption and Widget Sector Capital Usage
Let supply and demand for widgets (y) be given by the following two equations, respectively:
(1) yt = αt + β x t + ε t
(2) yt = γ + δ x t + Γ z t + u t
Posted by Menzie Chinn at 02:50 PM permalink | Comments (13) | digg this | reddit
The Global Surface Temperature Anomaly
From NOAA's National Climate Data Center:
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Posted by Menzie Chinn at 09:37 AM permalink | Comments (67) | digg this | reddit
November 15, 2009
Commodity inflation
Why are the prices of so many commodities rising in an economy that seems to remain quite weak?
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Posted by James Hamilton at 06:36 AM permalink | Comments (41) | digg this | reddit
November 11, 2009
Politico Does Economic Analysis...
Be afraid; be very afraid.
From "'Created or saved' doesn't add up", by Joseph Lawler:
...[t]he "created or saved" numbers are meaningless. The administration purposefully devised the metric to be nebulous. Without a counterfactual, showing the trend of unemployment in the absence of the stimulus, it is impossible to know how many jobs the stimulus saved.
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Posted by Menzie Chinn at 07:10 PM permalink | Comments (34) | digg this | reddit
November 10, 2009
Will rising oil prices derail the recovery?
Last April I described new research on the role of oil prices in the recent recession. Here's an update on what's happened since then.
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Posted by James Hamilton at 07:43 PM permalink | Comments (36) | digg this | reddit
November 09, 2009
"Where's the Consumption Disaster?"
Casey Mulligan asks:
So a year later, in September 2009, after living through a year of "disaster," how did real consumption expenditure (one economists' favorite measures of living standards) compare to what it was in September 2008?
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Posted by Menzie Chinn at 08:18 PM permalink | Comments (22) | digg this | reddit
Guest Contribution: The Liquidity Trap Does Not Make Monetary Policy Ineffective
By Joseph E. Gagnon
Today, we're fortunate to have Joe Gagnon, senior fellow at the Peterson Institute for International Economics, as a guest contributor.
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November 07, 2009
Consequences of the Lehman failure
William Sterling of Trilogy Global Advisors has an interesting new paper on the abrupt changes in financial markets subsequent to Lehman's bankruptcy on September 15, 2008.
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Posted by James Hamilton at 05:46 PM permalink | Comments (23) | digg this | reddit
November 05, 2009
Some Thoughts Elicited by Reading Some Calibration Papers
(Warning: Might be considered "wonky" by some) In many economic analyses, one wants to isolate the "business cycle" component of macroeconomic series. Here is one such series, which has had a detrending technique applied to it. Try to guess what it is.
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Posted by Menzie Chinn at 11:28 AM permalink | Comments (10) | digg this | reddit
November 04, 2009
Current economic conditions
The U.S. recovery is underway. But so far it doesn't look as strong as we had been hoping.
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November 02, 2009
Prospects for Employment under Differing Econometric Specifications
Most economists are projecting a slow recovery in terms of employment. What do historical correlations imply?
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Posted by Menzie Chinn at 06:32 PM permalink | Comments (14) | digg this | reddit
October 31, 2009
On Revisions and on Conditioning
Both have to be "handled with care".
Revisions
We're all tempted to make predictions on the basis of the last data point. And even more difficult to resist is the temptation to make definitive statements on the basis of data that are sure to be revised. For instance, we see this question from Casey Mulligan, "Where's the GDP Disaster?".
Last October, when we were told that spending and incomes were about to collapse, I predicted that "real GDP will not drop below $11 trillion (chained 2000 $)."
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October 29, 2009
A welcome GDP report
The Commerce Department reported today that the seasonally adjusted real value of the nation's production of goods and services grew at a 3.5% annual rate during the third quarter, a little better than the 3.2% average seen since 1947.
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Posted by James Hamilton at 05:14 PM permalink | Comments (15) | digg this | reddit
The 2009Q3 Advance GDP Release and Stimulus Measures
The 3.5% growth rate was, in my view, in large part attributable to direct measures to stimulate the economy, including direct spending on goods and services by the government (Federal, state and local), as well as tax measures. First, let's take a look at how each category of final demand accounted for total growth, in the context of a mechanical decomposition, in Figure 1.
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October 28, 2009
Futures As Predictors of Commodity Prices
As commodity prices start rising again -- at least some -- the question of whether futures are useful indicators seems relevant. Figure 1 shows the IMF commodity price indices, as reported in the October World Economic Outlook:
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Posted by Menzie Chinn at 08:21 PM permalink | Comments (14) | digg this | reddit
October 27, 2009
Improving financial regulation and supervision
There were some other very interesting presentations at the conference hosted by the Federal Reserve Bank of Boston last week. Fed Chair Ben Bernanke spoke on Financial Regulation and Supervision after the Crisis while Princeton Professor Alan Blinder's message was It's Broke, Let's Fix It: Rethinking Financial Regulation. Here I summarize four key reforms these speakers addressed.
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October 26, 2009
The National Saving Identity: Private Saving, Household Saving, and Rebalancing
The National Saving Identity states:
CA ≡ (T-G) + (S-I)
Where CA is the current account, (T-G) is the consolidated government budget balance, and (S-I) is the private sector saving-investment balance. Figure 1 depicts the profound shifts that have occurred in these components (normalized by nominal GDP).
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October 25, 2009
Evaluating the new tools of monetary policy
Last week I participated in a conference hosted by the Federal Reserve Bank of Boston, at which I discussed the new lending programs and asset acquisitions pursued by the Federal Reserve over the last two years. Previously I shared with Econbrowser readers empirical evidence on the effects these targeted liquidity operations seem to have had. Below I reproduce my remarks from the conference on the underlying motivation for using such measures, in which I suggested that the critical question is what was the underlying cause of the financial stress to which the Fed was responding. I distinguished between two possible interpretations of how the financial crisis arose.
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October 22, 2009
The Political Economy of Recovery and Rebalancing
Jeffry Frieden, Professor of Government at Harvard, has a new Council of Foreign Relations working paper "Global Imbalances, National Rebalancing, and the Political Economy of Recovery" :
Global macroeconomic imbalances -- massive borrowing by some countries and massive lending by others -- drove the financial boom and bubble that eventually burst into the current crisis. There is now nearly universal agreement that such imbalances cannot be sustained, and that the former deficit and surplus nations need to move toward macroeconomic balance.
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Posted by Menzie Chinn at 03:29 PM permalink | Comments (20) | digg this | reddit
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