January 31, 2010
Federal Debt: The Time Series
Here is a graph of Federal debt held by the public, as a share of GDP, 1990-09.
John Cochrane on the credit crisis
January 29, 2010
Strong GDP growth with weak fundamentals
The Bureau of Economic Analysis reported today that the seasonally adjusted real value of the nation's production of goods and services grew at a 5.7% annual rate during the fourth quarter. That's great news, but...
January 28, 2010
"No rate hikes likely in 2010..."
Despite the somewhat startling conclusion (at least to me), the implications are pretty straightforwardly arrive at. From Michael Rosenberg, Financial Conditions Watch (Bloomberg, Jan. 27, 2010) (link added 1/29 8am)
Fed Funds Rate Outlook -- A Taylor Rule Perspective
With U.S. real GDP growth moving back into positive territory in the second half of 2009 following four consecutive quarters of negative growth (see Figure 1), the economic forecasting community appears to be increasingly optimistic about the U.S. economy's growth prospects for 2010-11....
January 27, 2010
G-7 Consumption Behavior and Global Rebalancing
Or, the end of the consumption follows a random walk view.
Following up this post last week on Lee et al., here is another analysis of consumption behavior, but this one is cross-country. From the abstract to "After the Crisis: Lower Consumption Growth but Narrower Global Imbalances?" by Ashoka Mody and Franziska Ohnsorge:
January 26, 2010
A budget freeze?
Here I offer some thoughts on President Obama's new proposal.
CBO's Budget and Economic Outlook Update
January 25, 2010
Chinese Trade Elasticities, Updated
The price and income elasticities of Chinese trade flows are key parameters in the debate regarding the importance of Renminbi revaluation in achieving rebalancing.  I was hoping to update my estimates to incorporate data spanning the recent crisis, but Shaghil Ahmed at the Fed beat me to the punch with a new working paper that includes data spanning the recent downturn in Chinese trade flows. From Are Chinese Exports Sensitive to Changes in the Exchange Rate?
January 23, 2010
Why Bernanke should be reconfirmed
Econbrowser readers are well aware that there are a number of issues on which I have concerns about some of the decisions the Fed has made, such as dropping the ball on regulation (, ), keeping interest rates too low for too long over 2003-2005 (, ), taking some real risks with the Fed's new balance sheet (, , ), and pretending the Fed had nothing to do with the commodity price boom of 2008 (, ). Notwithstanding, there is no question in my mind that Bernanke should be reconfirmed as Chair of the Federal Reserve Board. Here's why.
January 20, 2010
Consumption Prospects and Rebalancing
In several previous posts, I've emphasized the importance of future US consumption behavior in determining whether the global imbalances shrink, or revert to their pre-crisis configuration.    An IMF SPN by Jaewoo Lee, Pau Rabanal, and Damiano Sandri weighs in on the question of consumption. From the executive summary:
January 19, 2010
Is it reasonable to worry about inflation in the current environment?
January 18, 2010
Policies for Increasing Economic Growth and Employment
From the CBO's report "Policies for Increasing Economic Growth and Employment in 2010 and 2011" released Jan 14, is an assessment of the boost to GDP and employment from various policies. Proper consideration of these measures are critical given the prospects for the output gap  and employment growth .
January 17, 2010
How the Federal Reserve earned its profit
I was curious to take a look at the details behind the following story:
The Federal Reserve Board on Tuesday announced preliminary unaudited results indicating that the Reserve Banks provided for payments of approximately $46.1 billion of their estimated 2009 net income of $52.1 billion to the U.S. Treasury. This represents a $14.4 billion increase over the 2008 results.
January 16, 2010
The January WSJ Survey: Recovery and Interest Rates
The WSJ survey for January is out. Growth is predicted to be fairly rapid, but hardly torrid, in 2010, with q4/q4 mean estimate at 3.0%. Here's the mean forecast of the log level of GDP, and the trimmed high and low forecasts.
January 15, 2010
Haiti relief efforts
One of the organizations to which I have made a contribution is Heart to Heart International.
January 14, 2010
What Are Current Small Business Credit Conditions, Really?
Casey Mulligan titles a post Credit Study by the Federal Reserve Says No Crunch, citing a Macroblog post. But he neglects to mention that the survey is "A small business snapshot from the Southeast". In contrast, a nation-wide NFIB survey summarizes conditions thusly:
January 13, 2010
Assessing Stimulus Measures: Statistical and Economic Significance
The CEA has updated its estimates of the impact of the stimulus plan on output. As I observed in my earlier post on assessing the results on 2009Q3 impact, one could use either a model approach (using multipliers, which can be derived from either neo-Classical synthesis, New Classical, New Keynesian models  ) or examine the actual versus some counterfactual based upon historical correlations (what CEA calls the "projection approach").
Links for 2010-01-13
Stuart Staniford, who earlier had been persuaded that global oil production might have already peaked, now comments on the potential for increased production from Iraq to push the peak up to a decade down the road.
King Banaian on disturbing developments in Argentina and Venezuela.
Economists comment on the role of the Fed in the housing bubble. Two in particular worth emphasizing:
Marvin Goodfriend: Interest rate policy was appropriately stimulative in the 2002-3 period. But rates should have been raised less mechanically and more aggressively in 2004-5 on grounds of the usual macroeconomic conditions.... A somewhat tighter stance of interest rate policy then could have cut off the last year or so of the house price appreciation and prevented the worst part of the subsequent adjustment.
Mark Gertler: If we could go back in history and make one policy change, I'd go after sub-prime lending. Absent non-prime lending, the likely outcome of the housing correction of 2007 would have been a mild recession like 2000-2001, and not the debacle we experienced.
January 11, 2010
Guest Contribution: Bernanke on the Taylor Rule
By David Papell
Marsh and Pfleiderer on the Financial Crisis
In this Preface, we offer some analysis of the 2008-2009 financial crisis and its implications for financial industry reform and research. We primarily focus on issues relating to transparency and the measurement of risk and how these are affected by management incentives that are often misaligned with the incentives of those who are exposed in various ways to the risk being measured. In the aftermath of the crisis many have called for increased transparency; we suggest that while transparency is no doubt a desirable goal in many ways, enhancing it could prove to be quite difficult.
January 10, 2010
More of the same
The U.S. economy continues to recover at a painfully slow pace.
January 08, 2010
Some Aspects of the Employment Report
The net job loss in the December nonfarm payroll (NFP) is unwelcome news, but given the (upward) revision in the November figure, one shouldn't think of this number as fixed. Figure 1 shows various employment series.
January 06, 2010
Reserves Are Revised Upward, the Dollar Share Declines
Perhaps the most startling thing about the new COFER data on reserves released by the IMF is not the declining dollar share in total reserves, but rather the fact that reserves have risen relative to where we thought they were . The change is entirely due to the upward revision in unallocated reserves by emerging market and LDC central banks. This point is shown in Figure 1.
January 05, 2010
Bernanke grades the Fed
Fed Chair Ben Bernanke's observations on monetary policy and the housing bubble have received a lot of attention. Like many other commentators (e.g., Arnold Kling, Paul Krugman, and Free Exchange), I agree with Bernanke's conclusions, but only up to a point.
January 04, 2010
Guest Contribution: Monetary Policy and Asset Bubbles in 2010
By Joseph E. Gagnon
In his speech at the American Economic Association yesterday, Ben Bernanke said that monetary policy played at most a small role in the U.S. housing bubble and that financial regulatory policy is the appropriate tool for preventing harmful asset price bubbles in the future. I agree with these conclusions, but I suspect that many do not, even within the world of central banking.
Some International Finance at ASSA
January 03, 2010
Inflation in China
Why hasn't inflation caught up with a monetary-induced boom in China?